Commission Votes To Close Tax Loophole

On June 12, the Massachusetts Special Tax Commission, whose members were appointed by Gov. Deval Patrick, House Speaker Sal DiMasi, and Senate President Therese Murray, recommended to close one of the tax loopholes proposed earlier this year by the governor.

The Commission voted to recommend closing the loophole called “check the box,” joining the 45 states that have already closed it. This loophole lets companies choose to be taxed as a different corporate entity in Massachusetts despite their corporate designation for federal tax purposes. “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,” explained Legislative Director Deirdre Cummings.

MASSPIRG joined with small business owners and business leaders in urging the Commission and state lawmakers to close seven tax loopholes totaling $500 million annually. In-state companies are forced to compete against multi-state companies that use high-priced accountants and complex transactions with subsidiaries to avoid paying Massachusetts taxes.

The Commission continues to look for ways improve the corporate tax code.