Determination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues

This is the State Auditor’s review of whether Massachusetts tax collections stayed within the limit set by Chapter 62F for the fiscal year that ended June 30, 2017.

“In accordance with the provisions of Chapter 62F of the Massachusetts General Laws, we have reviewed the Report of the Net State Tax Revenues and Allowable State Tax Revenues for the fiscal year ended June 30, 2017, as prepared by the Commissioner of Revenue.”

The audit checked whether the revenue report was complete and accurate, and whether the state collected more tax revenue than allowed.

“Our review was conducted for the purposes of ensuring the completeness and accuracy of the report and determining whether the net state tax revenues for the fiscal year ended June 30, 2017 exceeded allowable state tax revenues for that fiscal year.”

If tax collections go over the legal limit, the state must provide a tax credit, so this review affects whether taxpayers get money back.

“Thereafter, the Commissioner shall take all the necessary action to effectuate a tax credit equal to the total amount of such excess.”

For ordinary taxpayers, the practical result is that this report found no excess tax revenue for fiscal year 2017, so it did not require a Chapter 62F tax credit.

“For the fiscal year ended June 30, 2017, we have determined that the net state tax revenues of $26,044,206,400 were below allowable state tax revenues of $31,095,184,910 by $5,050,978,510, resulting in no excess state tax revenues.”

The state’s tax revenue was about $5.05 billion under the allowed ceiling, not over it.

“Net State Tax Revenues (under) Allowable State Tax Revenues for the Fiscal Year Ended June 30, 2017”

Because the audit found no excess revenue, the report does not call for the tax-credit process that would apply if the limit had been exceeded.

“For the fiscal years ended June 30, 1988 through 2016, the State Auditor determined that net state tax revenues were less than allowable state tax revenues; therefore, no tax credit was required to be effectuated by the Commissioner of Revenue for those years.”

The report shows that 2017 continued a long pattern since 1988 in which Massachusetts tax revenue stayed below the Chapter 62F limit.

“For fiscal years 1987 through 2017, net state tax revenues increased approximately 221%, from $8,102,373,437 to $26,044,206,400.”

“Allowable state tax revenues” means the maximum amount of state tax revenue allowed under Chapter 62F, based on wage and salary growth in Massachusetts.

“This chapter provides for the establishment, for each fiscal year beginning with the fiscal year ended June 30, 1987, of a state tax revenue growth limit, calculated on the basis of the level of growth in total wages and salaries of the citizens of the Commonwealth.”