Legislative Brief_MassCPAs

News & Updates from the Government Affairs Team

We're working to keep you informed in a world that changes by the minute. If you have anything you'd like to share, or if we can help you in any way, please email Zach Donah or Larry Liuzzo.

Legislation to Address Forgiven 2021 PPP Loans Before the Massachusetts Legislature

On Monday, State Senator Eric Lesser met with MassCPAs' government affairs team and a group of MassCPAs State and Local Tax (SALT) experts to discuss several legislative priorities, including the interest in addressing the 2021 Paycheck Protection Program (PPP) loans. The Senator was the lead sponsor of the legislation that excluded the income from forgiven 2020 PPP loans from being taxed by the state and has committed to leading the charge again for loans forgiven in 2021. You can read more about the Senator’s legislative priorities in our September issue of SumNews.

As we noted last month, Governor Baker filed a supplemental budget, which included legislation that would make PPP and other federal loans and state-specific grants nontaxable in Massachusetts for all recipients. The Legislature began deliberations on the provisions outlined in the Governor’s supplemental budget and we expect that conversations will turn toward certain tax provisions, including PPP, in the coming weeks.

We will be in touch with more details and action items for you soon.

To read the key provisions of Governor Baker’s legislation, click here.

Massachusetts House Overturns Governor’s Veto, Sends Pass-Through Entity Legislation to the Senate

Last week, the Massachusetts House of Representatives overturned Governor Baker’s veto on legislation pertaining to the taxation of Pass-Through Entities (PTE) where it is currently before the Massachusetts Senate and is expected to pass in an upcoming formal session.

The disputed language would allow PTE and other eligible businesses to pay state income tax at the entity level and would collect an estimated $90 million in revenue. The credit would be available to qualified members in an amount proportionate to each qualified member’s share of the tax due multiplied by 0.9, much like the model used in Connecticut.

To follow the history and progress of this legislation, click here.

Please Note: The Senate is in formal session today at 11:00 a.m., therefore, information in this newsletter is subject to change.

Massachusetts DOR Withdraws Proposal to Require Sales Tax Breakdown

At a Department of Revenue (DOR) Advisory Council meeting last week, Amy Pitter, MassCPAs president and CEO, and other members of the Advisory Council, encouraged Commissioner Snyder and DOR leadership to reconsider their recent proposal that would have required sales tax filers to break down online sales versus in-store sales. Below is the DOR advisory announcing the news to withdraw the implementation of the proposal:

New reporting requirements, that were to begin in 2022, requesting sales tax filers to break down online sales versus in-store sales will not be implemented. At the most recent meeting of the DOR Advisory Council this month, Council members provided feedback from their members that reporting online sales versus in-store sales can be challenging as vendors make this distinction differently and the information may not be available or accurate at the time the return is filed. Council members asked the DOR to reconsider the implementation of the new requirements. The DOR has determined that at this time taxpayers will not be asked to break down sales by in-store versus online on their sales tax returns.

To subscribe to receive DOR updates, click here.

Influx of Federal Aid to Trigger Spike in Single Audits

As of June 2021, over $5 trillion in federal COVID-19 relief funding has been allocated across the country, of which Massachusetts has received roughly $73 billion, including $13 billion through the American Rescue Plan Act (ARPA).

The American Institute of Certified Public Accountants (AICPA) estimates that such an influx of federal aid will lead to 10,000 new single audits. For tips on working with first-time single audit clients, click here.

Renee Davis, CPA, a partner at Powers & Sullivan, LLC, and co-chair of MassCPAs' Governmental Accounting & Auditing Committee, had some advice for how to handle these audits, which was featured in our July issue of SumNews.

Massachusetts DOR: Extension for Sales, Use, Meals, Room Occupancy Taxes Ending Soon

Due dates for these taxes were extended for some taxpayers until November 1, 2021 for returns and payments were due March 20, 2020 – June 1, 2021. The extension applied to vendors or property operators with cumulative liability under $150,000 in the 12-month period ending February 29, 2020. Intermediaries were not included in the extension. Separately, penalties were waived for those with more than $150,000 of cumulative liability for the same time periods and tax types if filed and paid by November 1, 2021. Interest continues to accrue.

To subscribe to the newsletter, click here.

U.S. Department of Labor to Conduct Audit Quality Assessment of 2020 Plan Year Filings

The Department of Labor (DOL) Employee Benefit Security Administration (EBSA) Office of the Chief Accountant (OCA) is planning to conduct a study to assess the quality of audit work performed by independent qualified public accountants (IQPAs) with respect to financial statement audits of employee benefit plans covered under the Employee Retirement Income Security Act of 1974 (ERISA) for the 2020 Form 5500 filing year (plan years beginning in 2020). This includes calendar year 2020 filings filed on extension by October 15, 2021.

The DOL expects to take a year to conduct its analysis and then to issue a report, which is likely to be released sometime in 2023. The AICPA will assist members and other stakeholders through the process and be a source of information for the DOL.

The AICPA is developing resources about the upcoming EBP study that we’ll share with you as we learn more.

To read the AICPA alert with more information, click here.

DOR & IRS Updates

Guidance for Paycheck Protection Program (PPP)

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