* * * Breaking News * * *
Massachusetts lawmakers are to rescind retroactive 2002 tax bills!

157,000 tax returns will need to be amended before the statute of limitations expires! The Massachusetts Supreme Judicial Court decided that a law increasing the tax rate on long-term capital gains effective May 1, 2002 was unconstitutional. The court case known as the “Peterson case” determined that the effective date of the change in tax rate is January 1, 2002 unless the Legislature voted to change the date to January 1, 2003. If the January 1, 2002 date was used, nearly 50,000 Massachusetts taxpayers would owe additional taxes along with interest on gains realized the first four months of 2002. The Department of Revenue had sent 21,000 notices asking for the additional tax before the state legislators announced they would follow the Governor’s proposal to stop issuing preliminary tax bills for 2002 capital gains relating to the state Supreme Judicial Court’s Peterson decision and vote to change the date to January 1, 2003.

Once the new law is passed (it’s expected any day now), taxpayers will receive notices telling them to disregard the “preliminary bill.” Any taxpayers who already paid their tax bill will receive an automatic refund. The new law will affect 157,000 taxpayers who could be due a tax refund. Collectively the total refunds could reach $250,000,000.00.

DOR is working on guidelines the taxpayer will need to follow as they apply for the refunds.

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