State & Local Tax Impacts of COVID-19 for Massachusetts – 2022
Information current as of December 31, 2021.
COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor™ or visit our COVID-19 Resource Center for current information as needed.
Information Specific to Massachusetts
- Massachusetts advised that because grants awarded by the Massachusetts Growth Capital Corporation, debt relief subsidies paid by the U.S. Small Business Administration, and Economic Injury Disaster Loan grants are taxable under federal law, they’re also includible in gross income and taxable under state law. Further, business expenses paid with such grants or subsidies are deductible on state returns if they’re deductible on federal returns.
- Massachusetts DOR, Tax Filing Season FAQs – Coronavirus Relief Fund Grants; March 1, 2021.
- Massachusetts officially adopted its (previously temporary) regulation regarding the tax treatment of Massachusetts sourced income of nonresidents telecommuting due to the COVID-19 pandemic. All compensation received for services performed by a nonresident who 1) immediately prior to the Massachusetts COVID-19 state of emergency was an employee working in Massachusetts and 2) is working from a location outside Massachusetts due to a pandemic-related circumstance will continue to be treated as Massachusetts source income subject to personal income tax and personal income tax withholding. Apportionment is allowed based on the percentage of the employee’s workdays spent in Massachusetts on January 1 through February 29, 2020, or the percentage used on the employee’s 2019 return. Employees engaged in performing services from a location outside of Massachusetts who began working in Massachusetts due to the pandemic are allowed a credit for income taxes paid to the state where the employee was previously working. Further, the employer of such employee isn’t obligated to withhold Massachusetts income tax to the extent the employer remains required to withhold income tax with respect to the employee in such other state.
- Massachusetts Regs. Code 830 CMR 62.5A.3, adopted March 5, 2021, and effective for services performed from March 10, 2020, through 90 days after the date when the Massachusetts governor gives notice that the Massachusetts COVID-19 state of emergency is no longer in effect.
- Massachusetts announced that individual income tax returns and payments for the 2020 tax year otherwise due April 15, 2021, are now due May 17, 2021. Taxpayers who have already filed their 2020 returns without making associated payments have until May 17, 2021, to make such payments. Individual taxpayers will be eligible for an automatic extension of time to file their personal income tax returns if the amount required to be paid for an extension is paid by May 17, 2021. This extended due date doesn’t apply to estimated tax payments.
- Massachusetts DOR, Technical Information Release No. 21-2; March 19, 2021.
- Massachusetts legislation added personal income tax deductions for certain COVID-19 relief payments. Effective for tax years beginning January 1, 2020, and January 1, 2021, taxpayers can deduct up to $10,200 of unemployment compensation included in a taxpayer’s federal adjusted gross income. The taxpayer’s household income can’t exceed 200 percent of the federal poverty level. The legislation also provides penalty relief for failure to pay taxes on 2020 unemployment compensation. Effective for the 2020 tax year, taxpayers determining Massachusetts income tax liability can deduct from federal gross income the income from forgiven Paycheck Protection Program loans; advances received under the Economic Injury Disaster Loan program; payments of principal, interest, and fees owed on loans from the U.S. Small Business Administration; and funding under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act to support shuttered live venues, theaters, museums, and zoos.
- Massachusetts H.B. 90, effective April 1, 2021 and as noted.
- Massachusetts DOR, Technical Information Release TIR 21-6; April 30, 2021.
- Massachusetts issued guidance for individuals who telecommuted in 2020 because of the COVID-19 pandemic. Nonresidents who worked in the state before COVID-19 and began working remotely outside Massachusetts due to the pandemic must continue to source their wages earned from Massachusetts. Residents who worked in another state before COVID-19 and began working remotely from Massachusetts due to the pandemic are eligible for a tax credit if the other state applies similar sourcing rules. Individuals who spent more than 183 days and maintained a permanent place of abode in Massachusetts during 2020 were Massachusetts statutory residents. The directive doesn’t apply to the sourcing of wage income employees earned from a new job commencing after March 10, 2020.
- Massachusetts DOR, Directive 21-1; April 30, 2021.
- Massachusetts is extending tax deferrals for hotels and restaurants into the fall because of the COVID-19 pandemic’s continuing effect on the service industry. Smaller restaurants and hotels that collected less than a combined $150,000 in regular sales, meals, and room taxes in the 12 months prior to February 29, 2020, have until October 30, 2021, before they must begin submitting taxes and returns again. Larger hotels and restaurants that collected $150,000 or more in regular sales plus meals and room taxes in the 12 months prior to February 29, 2020, must begin collecting and submitting monthly taxes and returns again in May, with the first monthly filing deadline on June 30, 2021. However, the revenue department also gave these larger businesses until October 30, 2021, to submit taxes and returns due from March 20 through June 1, 2021.
- Massachusetts Regs. Code 830 CMR 62C.16.2, permanently adopted August 6, 2021.
- Massachusetts DOR, Technical Information Release TIR 21-7.
- Massachusetts is extending the room occupancy tax return filing and payment remittance obligations until October 30, 2021, for operators whose cumulative liability was less than $150,000 in the 12-month period ending February 29, 2020, for returns and payments due during the period beginning March 20, 2020, and ending June 1, 2021. The suspension does not apply to intermediaries, who must continue to file returns and make payments under the standard process.
- Massachusetts Regs. Code 830 CMR 64G.1.1(11)(g), permanently adopted August 6, 2021.
- Massachusetts announced the telecommuting rules that were put in place to reduce disruption for employers and employees during the Massachusetts COVID-19 state of emergency will cease to be in effect as of September 13, 2021. Nonresident employees must now use the pre-pandemic rules to source income based on actual workdays spent in and out of Massachusetts.
- Massachusetts DOR, News Release; June 17, 2021.
- Massachusetts DOR, Tax Filing Season FAQs; September 13, 2021.
- Massachusetts issued information on certain sales and use and excise tax returns and payments for taxpayers affected by COVID-19. The information includes: 1) businesses must file a zero tax return for any periods where no tax is due; 2) for vendors or operators with cumulative liability of less than $150,000 during the 12-month period ending February 29, 2020, penalties and interest will begin to accrue from November 1 on any unpaid amounts; and 3) for vendors or operators with cumulative liability of $150,000 or more during the 12-month period ending February 29, 2020, only penalties will be waived if payment is made by November 1, and interest will be calculated from the original due date for each tax period.
- Massachusetts DOR, COVID-19 Response; October 21, 2021.
- Massachusetts updated guidance on the individual income tax treatment of unemployment compensation, forgiven Paycheck Protection Plan (PPP) loans, and certain federal COVID-19 pandemic relief payments. The information release is updated to clarify that penalties will be waived until January 1, 2022, on unpaid taxes on unemployment compensation received in 2020, not on unemployment compensation received in 2021. The information release also includes information on 1) the deduction of eligible unemployment compensation up to $10,200 for Massachusetts gross income calculations for taxable years beginning on January 1, 2020, and January 1, 2021; 2) the allowed deductions for cancellation of debt income from forgiven PPP loans; 3) the changed due date for 2020 returns and payments; and 4) deductions of certain other federal COVID-19-related relief from federal gross income for determining Massachusetts gross income for taxable years beginning January 1, 2020.
- Massachusetts DOR, Technical Information Release TIR 21-6; November 20, 2021.
- Massachusetts legislation creates personal income tax deductions for certain federal and state COVID-19 relief. Effective for tax years beginning on or after January 1, 2021, taxpayers can claim a deduction from gross income for income from PPP loan forgiveness; COVID-19 Economic Injury Disaster Loan payments; grant payments to shuttered venue operators; restaurant revitalization grant payments; and Massachusetts small business relief program payments.
- Massachusetts H.B. 4269, Laws 2021, effective January 1, 2021.