Tax & Budget News

BOSTON—A special commission appointed by the legislature and the Governor recommended closing one of the tax loopholes proposed earlier this year by Governor Patrick, and will continue to review other tax loopholes and ways to simplify or improve the corporate tax code.

The commission recommended to close the loophole called “Check the Box”. This loophole closing simply requires corporations to choose and be taxed as the same corporate structure in Massachusetts as they choose to be classified federally. Forty five states have already closed this loophole.

MASSPIRG has joined with small business owners and business leaders urging state lawmakers to close tax loopholes (see attached letter with business leaders). In-state businesses are playing on an uneven field, competing against multi-state companies that use high-priced, sophisticated accountants and complex transactions with subsidiaries to avoid paying Massachusetts taxes.

Existing tax loopholes, totaling over $500 million a year, allow mostly out-of-state businesses to avoid their fair share of taxes. That leaves the vast majority of businesses at a competitive disadvantage. It also leaves taxpayers – both businesses and individuals – to foot the bill for vital services including transportation, education, and public safety.

“Many small business owners don’t see how these corporate tax breaks help our business or our economy,” said Laurence Hammel, Owner of The Longfellow Clubs. “Asking big business to pay the same taxes we pay is not only fair, but makes good business sense for the economy.”

“Closing the “check the box” loophole is common sense and long overdue,” concluded Cummings. “Imagine declaring yourself a married homeowner on your federal tax return and a single renter on your state return, depending on which gets you the better deal. The IRS and Department of Revenue wouldn’t let us get away with that, nor should we let some businesses.”

Read Massachusetts Business Leaders' Open Letter to Lawmakers.