Massachusetts Fails to Adopt New Federal Filing Deadline

For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

By Adrianne Appel

Corporate taxpayers in Massachusetts will have to deal with different state and federal filing deadlines after a bill to align the two failed to pass.

“It’s a cost to business every year until it gets fixed,” Amy Pitter, chief executive officer of the Massachusetts Society of Certified Public Accountants (SCPA), told Bloomberg BNA.

When the federal government announced in 2015 that it planned to change its filing deadlines, most states quickly adjusted their deadlines to match them, but Massachusetts and a handful of other states didn’t act.

Massachusetts advocates, including the SCPA, got behind a bill ( H. 4716) to require the state to align its deadlines with the feds, but lawmakers failed to take up the bill Jan. 3, the final day of the legislative session.

That means corporate filers in Massachusetts will have to comply with two deadlines when filing their 2016 taxes. “It adds tremendous confusion and additional work,” Pitter said.

Improved Accuracy

The new federal filing deadlines are March 15 for partnerships and S corporations, and April 15 for individual and C corporation returns.

The federal deadlines allow businesses to file more accurate C corporation returns because they can use information from the March 15 partnership filings, Pitter said.

The new deadlines will reduce the need for C corporations to use estimated figures, she said, and that will reduce the number of amended returns filed by C corporations.

Massachusetts requires S corporations and C corporations to file on March 15, which will force some companies to use estimated figures and then amend their returns after they receive actual figures, Pitter said. Many other companies will seek extensions.

This “adds uncertainty” to the state revenue picture because it leaves the Department of Revenue without a full understanding until all the amendments and extended returns are filed, Pitter said.

Scared Off by Cost?

If the state switches to the federal deadlines, there will be a shift in revenue from the current tax year to the next, making it appear as if revenue is lost in the current year.

The DOR estimated the cost would be $25 million to $30 million, and Zach Donah, director of government affairs for the Massachusetts SCPA, pointed to that potential cost as a reason the bill didn’t move.

State revenue estimates for 2016 were lowered three times, and Gov. Charlie Baker (R) made cuts to the budget. Officials weren’t willing to pass a bill that might have lowered 2016 revenue even more, Donah said.

The bill was approved Nov. 3 by the House Committee on Revenue, and it saw no further action after being sent to the House Ways and Means Committee.

The SCPA expects that a similar bill will be introduced in 2017, Donah said, adding that its prospects are good.

“In the new year, we will start fresh and educate members on what this legislation means,” he said. “They are aware of the need for the bill.”

More than 400 of the group’s members e-mailed lawmakers in 2016 about the issue, Donah said.

To contact the reporter on this story: Adrianne Appel in Boston at aappel@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of H. 4716 is at http://src.bna.com/k9A.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Daily Tax Report