Massachusetts Society of CPAs Urges State to Update Tax Code

The Massachusetts Society of CPAs (MassCPAs), the professional association for certified public accountants representing more than 11,000 members, has just announced that it has published a white paper which supports Governor Baker’s proposal to update the compliance date for personal income tax purposes from 2005 to 2022. This critical update was included in the Governor’s proposed budget for the fiscal year 2023.

The white paper indicates several reasons why the State should update the compliance date. Here are five key points:

  1. Massachusetts is the only state that complies with a 2005 version of the Internal Revenue Code (IRC). This makes our state a unique outlier and defeats the purpose of compliance.
  2. There is no economic or tax reason for Massachusetts not to update its compliance date. It’s a routine action that almost every other state has taken to increase simplicity for the DOR and taxpayers.
  3. Compliance reduces complexity for taxpayers. Imagine if taxpayers had to calculate their federal income tax return and then perform a variety of separate calculations to determine their state income tax liability. Many Massachusetts taxpayers must do so due to the state’s 2005 IRC compliance. Updating the compliance date alleviates this administrative nightmare.
  4. Compliance is convenient for states because they can piggyback on federal government definitions, audits, and taxpayer data. Compliance does not affect the power of the legislature to make tax policy decisions for Massachusetts. The legislature will always retain full control over state-specific deductions and exemptions.
  5. Updating the compliance date would have an extremely minimal impact on state revenue (approximately $32.9 million according to DOR).

“Massachusetts is IRC 2005 compliant, but most states are IRC 2021 compliant, making us more obsolete than any other state by a landslide,” said Amy Pitter, president and CEO of the management of MassCPAs. “There is no economic or tax reason for Massachusetts not to update its compliance date. This inexpensive and necessary update will bring consistency and simplicity to Massachusetts taxpayers and streamline tax administration at the Department of Taxation. Revenue (DOR).We urge the Legislature to include this important provision in its upcoming FY23 budget proposals.”

To read the white paper, Click here.

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