ITB 12-05: Massachusetts proposed budget includes tax on pass-through entities' non-insurance income

Insurance Tax Bulletin
On January 25, 2012, Governor Deval Patrick submitted his budget recommendations for Fiscal Year 2013 to the Massachusetts Legislature. "Outside Section 9" of the bill contains a number of tax provisions including a "market-based" approach for sourcing service receipts when determining the Massachusetts sales factor (along with a "throw-out" rule) and a delay of the implementation of the FAS 109 deduction for corporations from the 2013 tax year to the 2014 tax year. Of particular importance to insurance companies, the budget would impose the corporate excise on the "non-insurance" income of a partnership or disregarded entity where an insurance company owns at least 50% of the partnership or disregarded entity.


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