AuditDetermination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues -- Fiscal Year 2022

This is the State Auditor’s official review of whether Massachusetts tax collections exceeded the limit set by Chapter 62F for the fiscal year ending June 30, 2022.

“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, 2022, as prepared by the Commissioner of Revenue.”

The Auditor checked whether the Department of Revenue’s report was complete and accurate, and whether the state took in more taxes 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, 2022 exceeded allowable state tax revenues for that fiscal year.”

State law requires a limit on tax revenue growth, tied to wage and salary growth, so the state cannot simply keep excess tax revenue without triggering the law’s credit process.

“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.”

Because the Auditor found excess revenue, the Commissioner of Revenue must take action to provide a credit for the excess amount.

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

The Auditor concluded that Massachusetts exceeded its allowable tax revenue limit by $2,941,499,731.

“Pursuant to Section 6 of Chapter 62F of the General Laws, we have determined that the net state tax revenues of $41,812,654,358 exceeded the allowable state tax revenues of $38,871,154,627, resulting in a credit of $2,941,499,731 to be effectuated by the Commissioner.”

The Auditor’s finding is final under the law, and the Commissioner must carry out the credit process.

“The law further states that the determination of the State Auditor as to the existence and the amount of excess state tax revenues shall be conclusive.”

This was unusual: from fiscal years 1988 through 2021, the Auditor found no excess requiring a credit, but fiscal year 2022 did require one.

“For fiscal years 1988 through 2021, the State Auditor determined that net state tax revenues were less than allowable state tax revenues; therefore, no credit was required to be effectuated by the Commissioner of Revenue for those years.”

“Allowable state tax revenues” means the legal cap for the year, calculated from the prior year’s allowable amount and the allowed growth factor.

“As defined in Section 2 of Chapter 62F of the Massachusetts General Laws, “allowable state tax revenues” for a fiscal year means the following: beginning after June 30, 1986, an amount equal to the greater of the allowable state tax revenues for the immediately preceding fiscal year multiplied by the allowable state tax growth for the current year, or in any case no less than the allowable state tax revenues for the preceding fiscal year.”