Important information for taxpayers from the Massachusetts Department of Revenue

Important information for taxpayers from the Massachusetts Department of Revenue

Please take some time to review these important tax matters, which could have an impact on your tax compliance. Many of the provisions summarized here were included in the Commonwealth’s FY21 budget.

PPP loan forgiveness income
The CARES Act provides that any cancelled indebtedness from the Paycheck Protection Program is excluded from gross income for federal income tax purposes. As you may know, legislation is currently pending that would change the rules about the Massachusetts tax treatment and reporting of forgiven PPP loan income. If the legislation passes, we will update the information on the FAQ webpage.

New return filing due date for some tax types
Sales/use tax, meals tax, marijuana retail tax, room occupancy excise (including local option) The due date for returns filed for periods beginning on or after April 1, 2021 is changing for sales/use tax, meals tax, marijuana tax and room occupancy excise (including local option). Taxpayers who previously filed returns by the 20th day after the close of the tax period now have until the 30th day after the close of the period to file. This includes all returns for sales/use tax, meals tax, marijuana tax and room occupancy excise, including local option. So, for example, a return reporting on the April 2021 monthly period will now be due on May 30th instead of May 20th. You can find more information in this Working Draft TIR.

New advanced payment schedule for some tax types
Sales/use tax, meals tax, marijuana retail tax, room occupancy excise (including local option) This provision applies to vendors and operators with more than $150,000 in liability for sales/use tax, meals tax, marijuana tax and room occupancy excise (including local option) in the previous year.

• Effective date - tax periods beginning on or after April 1, 2021.
• Advanced payment requirement - taxpayers will make an advance payment by the 25th day of the filing period based on gross receipts through the 21st day of the filing period.
• Remaining tax or excise through the end of the month - any remaining tax or excise due on gross receipts from the 22nd day of the filing period through the end of the month will be due on the 30th day of the following month and will be paid when the return is filed.

You can find more information here.

Paying income tax when telecommuting
Some employees telecommuted in 2020 because of the COVID emergency. Learn more about how non-resident employees can determine what amount of their 2020 wages might be subject to personal income tax, and when a resident employee may be eligible for a credit for taxes paid to other states. Note that special rules apply to those who commuted across state lines prior to the state of emergency.

New penalties on sales suppression software
Included in the FY21 budget is a provision that establishes a penalty to be imposed as of December 2020 on anyone who purchases, uses, maintains, or offers for sale automated sales suppression devices or phantom ware. These devices, sometimes called zappers, falsify the records of a point of sale system. The legislation imposes civil penalties of up to $25,000 for the first offense and up to $50,000 for each subsequent offense. Criminal penalties may also apply. Read more about the new provision.

How Massachusetts is treating partnerships that are audited by the IRS
The IRS is currently implementing provisions enacted in 2015 for a new system for auditing partnerships and the new rules will result in significant changes. Among the changes is a rule that in many cases will treat the partnership as a taxpayer and require the partnership to pay any assessment resulting from a federal audit. The MA FY21 budget provision requires partnerships and their partners to inform DOR of a federal audit, report tax changes resulting from the audit, and account for any resulting state tax liability. DOR is developing a mechanism for the required partnership reporting. Read more about the new provision.