Taxing Matters

On December 29, 2022, President Joe Biden signed the SECURE Act 2.0 into law. The legislation includes many changes affecting how Americans can save for retirement. Through tax credits, increases in retirement savings limits and delayed distribution requirements, it benefits both individuals who save for retirement and employers offering retirement plans.

In state tax news, Massachusetts filers may be eligible for a refund based on their 2021 tax filing. Chapter 62F is a general law that requires the Mass. Department of Revenue to issue a refund to taxpayers if total tax revenues in a given fiscal year exceed an annual cap tied to wage and salary growth in the Commonwealth.

Echoing the challenges described in the Economy section, the IRS continues to struggle with impacts from the pandemic and staffing shortages.

With our Tax Department working diligently towards the April deadline, we wanted to provide a brief update on recent legislation for retirement savings.

As we enter the new year, Congress is still deliberating on legislation that could impact the 2022 tax year. The Build Back Better plan was passed by the House in late 2021 but ultimately was not signed into law by the end of the year. The bill has gone through several revisions and could be passed in early 2022. While the act was not passed before the start of 2022, it could still have retroactive tax implications this year.

Because the Act contains a large number of spending provisions, the tax provisions generally go in one direction – up. We begin with a discussion of the proposed changes that could impact individuals and families.

With the American Rescue Plan Act, the child tax credit was expanded effective only for 2021.

This plan contains several proposals for changes to individual income and estate tax law. It is the third of three plans put forth by the Administration. The first is the recently enacted American Rescue Plan, which provided additional economic stimulus. The second is the recently introduced American Jobs Plan, an infrastructure bill.

We are writing with an important update regarding changes to the filing deadline for 2020 tax returns.

In early December, the IRS Commissioner announced that there are still approximately 6.8 million returns in process, more than one million unprocessed returns and three million pieces of unopened mail.

The IRS has struggled to address the problem of tens of millions of pieces of unopened correspondence, including payments. As a result of the backlog of mail that accumulated over spring and summer (unopened mail was estimated to number 12 million items), millions of taxpayers received balance due notices from the IRS. The IRS announced in August that it had suspended sending certain balance-due notices to taxpayers while it continued to process its backlog of unopened mail, which may, in some cases, contain the sought payments.