MA Taxpayers May Expect Refunds of Excess Tax Revenue

Massachusetts’ State Auditor Suzanne Bump recently announced that Fiscal Year 2022 (FY22) Massachusetts tax revenue collections exceeded the annual tax revenue cap set by Chapter 62F of the Massachusetts General Laws by $2.941 billion. This revenue will be returned to taxpayers in the coming months.

In general, eligible taxpayers will receive a credit in the form of a refund of approximately 13% of their Massachusetts personal income tax liability for Tax Year 2021. This percentage is a preliminary estimate and will be finalized in late October, after the 2021 tax return filing extension deadline of October 17, 2022. Please also note that credits may be reduced due to refund intercepts, including for unpaid tax liability, unpaid child support, and certain other debts.

The refund will be based on Massachusetts tax, after the application of all allowable tax credits. This includes the Earned Income Credit, Dependent Credits, and Credits for allowable Solar and Wind Energy projects.

Of particular relevance to owners of pass-through entities (S Corporations, LLCs/Partnerships, Trusts), the tax on which the refund is calculated is also reduced by credits for taxes paid to states other than Massachusetts and the credit for the Pass-Through Entity Tax paid on the owners’ behalf by the entity.

Individuals living outside of Massachusetts that file on a nonresident basis, or have Composite Tax payments made on their behalf by a pass-through entity, are also eligible for this refund.

To receive this refund, you must have filed a 2021 state tax return on or before October 17, 2022. If you meet this qualification, you will receive the refund automatically as either a check sent through the mail or through direct deposit. It is not known whether refunds will be issued to late filers via other means. Accordingly, AAFCPAs recommends that all taxpayers required to file Massachusetts tax returns for 2021 do so a timely basis.

An estimate of the refund you may expect can be found on the Mass.gov website, but results may vary depending on the state’s final determination.

Distribution of refunds is expected to begin in November 2022. No action is needed to receive your refund. More specific information about timing for refunds will be shared closer to that time.

If you have questions please contact:  Tyler Champagne, CPA, MSA, at 774.512.9012, tchampagne@nullaafcpa.comRichard Weiner, CPA, MST at 774.512.4078, rweiner@nullaafcpa.com; or your AAFCPAs Partner.

About the Authors

Tyler Champagne
Tyler provides proactive tax planning & compliance solutions for private, closely held businesses and their owners & shareholders in a variety of industries, including construction, real estate, professional services, and technology. Tyler combines technical knowledge with proactive tax strategies. He advises clients on year-end and multi-year tax planning, including: guidance related to how business and personal decisions may impact your tax strategy; understanding the impact of changes in tax code; monitoring opportunities to maximize federal and multi-state tax credits; evaluating nexus and apportionment; and monitoring & forecasting of income and expenses to avoid year-end surprises. His depth of expertise ensures that clients are taking advantage of all available short and long-term tax benefits to minimize their tax liability.
Richard Weiner CPA
Rich has over 30 years of broad tax experience with a specialty in tax planning and consulting for private and publicly-held businesses. Rich has specific expertise in the Software, Bio-Technology, Medical Device, Life Science, Manufacturing, Retail, Professional Service and Publishing industries, as well as U.S. aspects of international taxation. He works extensively with European companies expanding into the U.S. market. Additional areas of focus include companies and stockholders in transition, including structuring of and planning for Mergers & Acquisitions, planning for changes in ownership and management, and adoption of tax methodologies with a view toward the long term. He is well known in his field and is a frequent speaker on a variety of tax related topics.