BOSTON, MA – Just over one week after the Department of Revenue
sent 48,000 taxpayers notices to collect capital gains taxes from
2002, State Representative William Lantigua (D-Lawrence) and the
Legislature took immediate action to repeal these retroactive
taxes as well as rebate taxes paid on assets sold between May and
December 2002.
“The people who received bills in the mail can breathe a lot
easier – disregard those notices and put your wallets away,”
Lantigua said. “My colleagues and I have come up with a way to
ensure that retroactive taxes are a thing of the past in
Massachusetts .”
Three years ago, at the height of the most recent fiscal
crisis, the Legislature increased the capital gains tax as a way
to balance the state budget and avoid catastrophic cuts to
essential government programs. The court struck down the mid-year
hike and a second attempt to deliver tax amnesty to certain
taxpayers affected by the increase.
“The Legislature never intended to make Massachusetts residents
pay retroactive capital gains taxes,” Lantigua said. “This
situation was the result of two highly unusual Supreme Judicial
Court rulings that limited tax policy decisions. We acted quickly
to bring fair and equitable resolution to a very difficult issue.”
The plan approved by the Legislature and sent to the Governor
moves the effective date of the tax increase to January 1, 2003 ,
preventing the retroactive tax and complying with the court’s
ruling that taxpayers be assessed equally in the same calendar
year. The move requires the state to forfeit $150 million in
uncollected tax receipts and to rebate between $56 million and $69
million annually to as many as 157,000 taxpayers over the next
four years.
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