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Governor Baker Signs $47.6 Billion Budget
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On July 16, Governor Baker signed a $47.6 billion budget for FY22, which included a spending cut of $7.9 million and vetoes on a number of items, including the Legislature’s proposal to again extend the delay of the charitable deduction.
In a letter to the Legislature, the Governor summarized a few key highlights in the budget:
- SALT Deduction
- The Governor amended the budget to his original proposal, which directs the Department of Revenue (DOR) to issue regulations permitting passthrough entities (PTE) to elect to be taxed at the entity level and allow qualified members to receive a full credit of the personal income tax imposed on the members’ share of the excise paid by a PTE. The Conference Committee budget proposal would have also allowed PTEs and other eligible businesses (including trusts and estates) to pay state income tax at
the entity level. However, a partial 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.
- Education
- Fully funding the implementation of the landmark Student Opportunity Act
$219.6 million in new Chapter 70 funding, for a total Chapter 70 investment of $5.503 billion
- Complements substantial federal resources including $2.9 billion in
Elementary and Secondary School Emergency Relief (ESSER) funding and $3.4 billion in the American Rescue Plan (ARPA) direct aid for local governments throughout Massachusetts
- Labor and Workforce Development
- $17.9 million in total funding to continue transforming vocational high schools into Career Technical Institutes running three shifts per day
As we noted last week, the budget will not use any money from the state’s Stabilization Fund, also known as the Rainy-Day Fund, which is now projected to end in FY22 with $5.8 billion, an increase of $4.7 billion since the start of the Baker administration.
To read the Governor Baker's FY22 budget summary, click here. The Governor’s Amendments to the budget can be found here.
The Legislature will have the opportunity to override the Governor’s vetoes and budget amendments and we will keep you posted on their actions.
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DOR to Issue Refunds for Penalties Related to UI benefits
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According to the DOR, due to the COVID-19 pandemic, Massachusetts is waiving penalties related to tax on 2020 unemployment income. Self-assessed underpayment of estimated tax penalties will be included in the waiver.
Notices will go out if penalties have previously been paid and the penalty waiver results in an overpayment. The taxpayer does not have to do anything. Refunds will be issued by paper check or the refund will be applied to taxes owed.
For other news items or to subscribe to receive updates directly from the DOR,
click here.
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Governor, Legislature at Odds on ARPA Spending
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The Governor announced earlier this week that the administration will commit $186 million of the ARPA funds to focus on healthcare and workforce training. The Legislature gave the Governor the authority to spend $200 million unilaterally and moved the rest of the $5.3 billion into a separate account under the Legislature’s purview.
On Tuesday, Governor Baker testified before the Joint Committee on Ways and Means on his bill to spend $2.9 billion of the roughly $5.3 billion received from the ARPA, which would be allocated to programs and initiatives relating to housing and homeownership support, job training, water and sewer infrastructure and more.
The Governor has stressed urgency in tackling these issues and argues that action is required soon, whereas the Legislature seems to prefer a process that is open to public debate, which can take months, if not years to find consensus.
The debate on how to spend the federal funds, where the funds would be allocated and when promises to be a discussion that will be had for months to come. We will keep you posted as we learn more.
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Preparing for the Future of Work in the Commonwealth of Massachusetts
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Last week, Governor Baker announced the findings of a report outlining what the future of work may look like in the near- and long-term, and how the state should prepare the post-pandemic economy.
The report is divided into eight core insights that “could cause the most critical shifts impacting the future of work” and are summarized into four themes:
- Changing ways of working – such as hybrid and remote work – may shift the center of gravity away from urban core, further reinforced if business travel decreases.
- The pace, scale and breadth of reskilling needed for job transitions must be much greater than before the pandemic; creating the workforce of the future will require extensive, thoughtful preparation.
- The pandemic has already exacerbated pre-existing inequities for many and as we look ahead, the future of work will not be experienced equally across the Commonwealth.
- The risk of future job growth moving outside Massachusetts is rising due to the high costs of living and doing business in the state.
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CPA Firm Renewal Affidavit Forms Due August 1
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CPA Firm Renewal Affidavit Forms are due by August 1.
Please note:
The Division of Professional Licensure recommends that licensees use Internet Explorer, Mozilla, Firefox or Safari to renew licenses.
To access the 2021 Firm Affidavit Form, click here.
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DOR & IRS Updates
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Guidance for Paycheck Protection Program (PPP)
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2021 PCPS/CPA.com National MAP Survey
Gathering insights from practitioners in firms of all sizes, the goal of this survey is to help firms evaluate how successful they were in responding to the pandemic, and understand what worked and what could have worked better. This survey allows practitioners to benchmark their firm’s operations with those similar in size and region and with the top performing ones.
The survey will remain open until Tuesday, August 31.
TAKE THE SURVEY
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If you have anything you'd like to share, or if we can help you in any way, please reach out to Zach Donah at zdonah@mscpaonline.org or 617.303.2411, or Larry Liuzzo at lliuzzo@mscpaonline.org or 617.303.2405.
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