October 16, 2020
Gov. Baker Submits Revised FY21 State Budget Proposal, Continues Pursuit of Troubling Sales Tax Changes
Gov. Charlie Baker has submitted a revised FY21 state budget plan, proposing to spend more money ($45.5 billion) than previously proposed, as he seeks to guide the state through the COVID-19 crisis. The Administration projects state tax revenues will be $3.6 billion lower than previously forecast, but proposes increased spending based on federal relief funding and utilization of $1.35 billion in state reserves from the "rainy day" fund.
As expected, the revised budget includes his earlier sales tax modernization proposal, making changes to the state’s sales tax collection and remittance process. The proposal includes “Real Time” or daily remittance, requiring third party processors of credit/debit transactions to remit to the Commonwealth, on a daily basis, the portion of a sale that is attributable to sales tax, with a new effective date of July 1, 2024. Any vendor subject to the collection of sales tax, including meals and local option meals tax, room occupancy tax, and marijuana tax, will be required to separately identify the tax and non-tax amounts for which payment is sought from a third party payment processor. The third-party payment processor will then directly pay the identified tax portion to the Department of Revenue (DOR) on a daily basis. There is no set threshold for size of vendors impacted by this proposal.
The new proposal also again seeks an early remittance scheme for certain tax filers. In January, the proposal called for vendors with $100,000 or more in annual sales tax liability to move to an undetermined earlier remittance schedule. The revised proposal sets that threshold at $150,000 in annual sales or room tax liability, but the details are left to the discretion of the DOR.
RAM has fought this fight since 2017, and we continue to strongly oppose “Real Time” sales tax collection. With regard to an earlier remittance or prepayment scheme, if to be considered at all, the threshold must be increased to $1 million in annual sales tax liability in order to protect small, MA based sellers.
The revised budget also includes a proposal to allow for the purchase of lottery products using a debit card. The prohibition on the use of credit cards to buy lottery products would remain in effect. The Legislature has yet to indicate how they will proceed with their own budget considerations, the schedule now severely impacted by the COVID crisis.
As Eviction Moratorium Expires, State Offers New Residential Assistance
The Commonwealth’s current moratorium on evictions and foreclosures will be allowed to expire on October 17, 2020. The moratorium was initially enacted in April in an effort to protect homeowners, tenants and some small businesses during the COVID-19 State of Emergency, and was extended in August. The moratorium included protections for small businesses, provided that the business met certain criteria, including having fewer than 150 full-time equivalent employees.
The Department of Housing and Community Development (DHCD) is offering two programs that can assist eligible low-income households in covering both past and future rent and mortgage costs. The Administration also announced a $171 million initiative to support tenants and landlords during the pandemic. When the state moratorium expires, a moratorium established by the Center for Disease Prevention and Control (CDC) will become effective in Massachusetts. Through December, the CDC moratorium will prevent evictions for non-payment for qualified tenants who submit a written declaration to their landlord.
To learn more about the Eviction Diversion Initiative and available housing assistance programs, visit mass.gov/CovidHousingHelp.
Most MA Communities in Phase III, Step II
The majority of the state has now moved forward in the Reopening Massachusetts process, as effective Monday, October 5th, low-risk communities were permitted to advance into Phase III, Step II. Low-risk communities are those with low COVID-19 transmission rates, as determined by the state and published regularly on the state’s website. Cities and towns designated "red" in the MA Department of Public Health's (DPH) color-coded system are not permitted to proceed with Step II until they move to low-risk.
Specific guidance and detailed updates to the state’s protocols have been posted to the sector specific protocols and best practices homepage. Specific retail and restaurant guidance can be found:
Members are encouraged to review closely the recommended and required practices for dealing with instances of a positive case in your location, whether it be an employee or a customer. Restaurant and retail setting protocols differ slightly, yet both call for a shutdown of the “site for a deep cleaning and disinfecting of the workplace in accordance with current CDC guidance.”
All members are encouraged to check back frequently for updated sector specific protocols and guidance to ensure ongoing compliance.
PPP Program Forgiveness Simplified
The SBA and U.S. Treasury have released a simplified loan forgiveness application for PPP loans of $50,000 or less. Treasury has also posted an updated FAQ clarifying that the extended deferral period under the PPP Flexibility Act automatically applies to all PPP loans. Also, the IRS announced that PPP forgiveness amounts are not to be included in a borrower’s gross income for federal income tax purposes, and lenders should not issue a 1099 to borrowers for the PPP forgiveness amount.
|
