To be eligible, taxpayers must have filed their 2021 state tax return by October 17. State officials said a person’s refund can be reduced if they have unpaid taxes, unpaid child support, or other debts.
State officials said they plan to start sending payments in November, with the expectation that all refunds will expire before the end of the year.
It would be a quick cue — some argue illegally — to distribute billions of dollars, and effectively ensure millions of people get the checks before Governor Charlie Baker, a Republican who has run three times for the corner office and presents himself as a trusted official of tax money, leaves office in January.
Some of the state’s high-income earners are also expected to be among those who benefit the most. The law states that any credit is applied on a “proportional basis,” that is, the more a person owes in income taxes, the higher the amount owed.
Baker administration officials have warned that the 13 percent refund is an initial estimate and that officials will finalize it in late October, after all 2021 tax returns are filed.
“These are going to be big checks for some people, but for most people they won’t be huge checks,” said Luke Stein, associate professor of finance at Babson College. Stein said that given the timing of the checks so shortly before the holiday season, it may nonetheless mean that many people are using the extra cash on discretionary items they “would not have bought otherwise.”
“Maybe they are going on a trip or eating a meal at a restaurant that they would otherwise have,” he said. “Every dollar helps.”
Baker released his plans for the payments the day after auditor Susan M. Pomp says the state is required to return $2.94 billion to taxpayers under a measure passed by voters in 1986 intended to limit the growth of government tax revenue in the growth of total wages and salaries, and to return any surplus to taxpayers.
It marks the second instance in which the law has been enforced in nearly 40 years.
The country ended its last fiscal year in June with a Nearly $5 billion surplus After collecting nearly 21 percent more tax revenue than a year ago, an extraordinary jump. Baker aides said the surplus is large enough to cover credit, and they estimate the state will still have around $2 billion in surplus revenue, a huge number in and of itself.
“With households continuing to be pressured by rising prices and inflation, these returns will provide some much needed relief,” Baker, who is not seeking another term, said in a statement Friday. “Even with nearly $3 billion being returned to taxpayers, there are still significant resources at the state and federal level.”
Established state officials a website Where people can calculate the estimated credit. The state also plans to launch a five-day-a-week call center starting Tuesday to help answer questions.
The only other time the law was triggered was in 1987 when tax collection exceeded the allowable amount by $29.2 million, according to the previous report From Bump’s desk.
At the time, the state did not issue the credit directly, but instead added a line to its 1987 version of the individual income tax return form where an individual taxpayer could “enter his or her individually calculated share.” The state finally issued 16.8 million dollars In credits, approximately $12.4 million is left unclaimed.
Whether the Baker management could, in fact, issue the credits as a straight refund may be an open debate.
Kurt Wise, senior policy analyst at the Massachusetts Center for Budget and Policy, told the Globe on Thursday that Law Clearly describing the refund as a “tax credit,” effectively limiting the form it can take. Wise also noted that Bump in her own statement described it as taking “the form of a credit,” which typically reduces the taxes a person owes.
However, the language leaves it to the State Revenue Commissioner to set the rules for implementing the law. “Using a different method in 1987 does not preclude DOR from making a different choice now based on current circumstances,” said a spokesman for the Baker Budget Office.
State Representative Mike Connolly, a Cambridge Democrat who has advocated limiting what high-income earners can get in credit, said Friday that he is considering legal action to try to prevent Baker from issuing checks “in this unprecedented way”. Law gives taxpayers The option to file a claim “to enforce the provisions of this section”.
Connolly said his goal is not to delay people’s receipt of the money, but for the legislature to “take action as quickly as possible to expressly and legally allow these redemption checks to be distributed this fall, and at the same time, for us to adjust the distribution” formula so income people see The average and the poor share a larger “of about 3 billion dollars.
House and Senate leaders have not indicated that they have any plans to change the law or reshape how the state distributes surplus revenue. A senior legislative official hinted that he agreed with Baker’s plan.
In a statement Friday, House Speaker Ronald Mariano said he was “happy to see the administration quickly put in place plans to distribute the money to taxpayers.”
“I am looking forward to [seeing] Democrat Quincy said.
The prospect of billions being returned to taxpayers has shaken and landed Beacon Hill Amid a separate ongoing debate over whether the state should raise taxes on some of its wealthiest residents.
Baker’s disclosure during the final days of the legislature’s formal sessions in July of the state’s willingness to launch a decades-old law upended talks about a $4.5 billion spending package that included nearly $1 billion in a proposed tax break.
The legislature concluded its formal sessions on the morning of August 1 With no agreement on legislation, leaving the fate of the final package in limbo. Mariano said this week that legislative leaders intend to continue talks about a possible economic development package, although it is unclear when and in what form it might appear.
Matt Stout can be reached at email@example.com. Follow him on Twitter Tweet embed.