The Baker administration took significant steps Friday to return nearly $3 billion in excess state revenue to taxpayers, officially repealing the regulation that governed how taxpayers got credit the only time other than Chapter 62F. came into play, in 1987, and publishing a technical document. explaining exactly how the process will work this year.
About 3.6 million Bay Staters are expected to recoup a $2.941 billion share that the state government is required to return after collecting more taxes last year than a 1986 election law known as the of Chapter 62F allows it. Auditor Suzanne Bump certified that amount last month, and the Baker administration said it plans to return the money by mailed check or direct deposit, likely starting in November. To be eligible, a taxpayer must have filed a 2021 state tax return by Monday.
The revelation that the mostly forgotten law would kick in and shrink the size of the historic surplus that Beacon Hill could carve crippled legislative Democrats, who have still been unable to rally around a way forward on the massive economic development bill that they prioritized earlier this year.
But while the nearly $3 billion impact of Section 62F was unclear until late July, the Department of Revenue began the process of repealing the “obsolete” regulation that guided 62F distributions in April when he issued a notice of hearing in May on the little-known rules.
On Friday, the DOR sent out a notice that the regulation had been officially revoked “because it is obsolete.”
The Baker administration told the New Service in August that it had received no public comment on its plan to repeal the rule (830 CMR 62F.6.1) from the May hearing.
The regulations that have been repealed outlined a process whereby a taxpayer “may claim an excess income credit for personal income tax for the current tax year equal to the personal income tax of the taxpayer for the preceding taxation year multiplied by the percentage of surplus income”.
But with nearly $3 billion owed to taxpayers instead of less than $30 million in 1987, Baker said he wanted the money to come out in the form of refund checks in the coming weeks rather than as next year’s tax credit.
To that end, the DOR also released a “Technical Information Release” later Friday that explains how the agency plans to handle the excess revenue credit whenever the auditor certifies that the state has collected more than the ceiling of Section 62F does not allow it. The document clarifies that it begins with “appropriations to be issued for the fiscal year ending June 30, 2022.”
First, the DOR will calculate the “surplus revenue percentage” that will be used to calculate a taxpayer’s excess revenue credit amount by “dividing the state’s excess tax revenue as determined by the state auditor for the previous year by the estimated total personal income tax income received by the Commonwealth in the current calendar year in payment of personal income tax debts incurred for the tax year The DOR said this will happen after the deadline to file an eligible return, which is Monday.
Next, the DOR will multiply the liability as reported on a taxpayer’s personal income tax return (after reducing any credits) by the “surplus income percentage” to calculate the taxpayer’s excess income credit amount. .
“Where the application of the excess revenue credit would reduce a taxpayer’s obligation as shown on the taxpayer’s income tax return filed for the preceding year, the Department will issue the amount of the reduction of said obligation as The excess income credit cannot reduce a taxpayer’s liability for the previous tax year to an amount less than zero,” the DOR wrote in the document.
It’s unclear whether the administration has taken any additional steps toward distributing the Section 62F money. A spokeswoman for the Executive Office of Administration and Finance was absent from the office when the repeal of the regulations and new guidelines were announced on Friday. The chief of staff of the budget office, to whom the media inquiries were directed, did not respond to questions from the information service.
What was made official on Friday mirrors what the Baker administration announced a month ago. Since then, a top senator has quibbled with the administration’s plan — “The law is pretty clear, in my opinion, if you read the law,” the Senate Ways and Means Chairman said last month. , Michael Rodrigues. “So if you’re going to follow the law, that we hope everyone follows the law, then there will be credits next year.” — and a small group of progressives have launched a bid to change the way excess income is returned to taxpayers.
On July 31, Education Committee Co-Chair Rep. Alice Peisch told the News Service that the effort to repeal the regulations suggested that Baker administration officials knew in May that the legislation could trigger refunds, a situation Baker disclosed publicly in late July, after the two branches passed bills weighing more than $4 billion and featuring a combination of direct spending and proposals for permanent tax relief.
“It would have been nice to get a little head start on the fact that it looked like we might be getting to this point before we do the economic development bill,” Peisch told the News Service. During the same interview, she also said she had “no idea whether or not they knew” about the likelihood of mandatory tax relief under 62F.
Baker noted that lawmakers have access to the same revenue collection figures as the administration.
Monday afternoon could reveal exactly where House Speaker Ronald Mariano and Senate Speaker Karen Spilka stand on Baker’s latest plan: The so-called Big Three are to meet privately — and then with the media — at 12:30 p.m. in what has become a rare leadership meeting.
Download the FREE Boston 25 News App for the latest news alerts.
Follow Boston 25 News on Facebook and Twitter. | Watch Boston 25 News NOW
©2022 Cox Media Group