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Massachusetts DOR Reports on Mid-July 2021 Tax Revenues

Dated July 22, 2021

SUMMARY BY TAX ANALYSTS

The Massachusetts Department of Revenue has reported that as of July 15, total mid-month tax collections were down $388 million — or 29.6 percent — from the same period last year, attributable to decreases in income estimated payments and return payments; the DOR noted, however, that July 2020 mid-month income estimated payments, return payments, and refunds are overstated and do not provide a valid comparison to mid-July 2021 results because they included payments and refunds attributable to 2019 returns — the deadline for which was extended to July 15, 2020, in response to COVID-19 — which were recorded as fiscal 2020 revenues, but not until July 31, 2020.

Mid-July 2021 individual income tax collections decreased 45.9 percent, while sales and use tax and corporate and business tax revenues rose 64.2 percent and 67.3 percent, respectively.

July 20, 2021

The Honorable Aaron Michlewitz, Chair
House Committee on Ways and Means
State House
Room 243
Boston, MA 02133

The Honorable Todd M. Smola, Ranking Member
House Committee on Ways and Means
State House
Room 124
Boston, MA 02133

The Honorable Michael J. Rodrigues, Chair
Senate Committee on Ways and Means
State House
Room 212
Boston, MA 02133

The Honorable Patrick M. O'Connor, Ranking Member
Senate Committee on Ways and Means
State House
Room 419
Boston, MA 02133

Honorable Chairs and Ranking Minority Members of the Committees on Ways and Means:

Pursuant to Section 6 of Chapter 14 of the General Laws1, the Department of Revenue (DOR) hereby submits its mid-month tax revenue report for the month of July 2021, the first month of fiscal year 2022. The attached table shows July 2021 month-to-date tax revenue collections through July 15, 2021, along with changes from the equivalent period in July 2020.

Revenue collections are uneven and usually weighted toward month-end, and the brief period covered in the mid-month does not provide sufficient data for comparison to prior years. Therefore, the Department urges that mid-month figures not be used to assess trends or project future revenues.

Context for July Revenues

July is historically one of the smaller months for revenue collection, because neither individual nor business taxpayers make significant estimated payments during the month. As a result, roughly 6.7% of annual revenue has been received on average during July.

Highlights

Total Tax collections for the month-to-date period were $921 million, down $388 million or 29.6% versus the same period in July 2020. The month-to-date decrease is due to decreases in income estimated payments and returns payments.

However, because the April 15, 2020 deadline for 2019 income tax filings and payments was moved to July 15, 2020, July 2020 mid-month collections included income estimated payments, income return payments, and refunds attributable to 2019 returns. These payments and refunds were ultimately recorded as June fiscal year 2020 revenue, but not until July 31, 2020. As a result of these timing factors, July 2020 mid-month income estimated payments, return payments, and refunds are overstated and do not provide a valid comparison to July 2021 mid-month results.

Total Tax collections for the month-to-date period were down $388 million or 29.6% versus the same period in July 2020.

  • Income Taxes totaled $608 million, down $516 million or 45.9% versus the same period in July 2020. The decline was impacted by the timing factors mentioned above.

  • Sales & Use Taxes were $103 million, up $40 million or 64.2% versus the same period in July 2020.

  • Corporate & Business Taxes were $134 million, up $54 million or 67.3% versus the same period in July 2020.

  • Other Taxes totaled $75 million, up $33 million or 79.7% versus the same period in July 2020.

Detail

Total Income Tax of $608 million for mid-month July is comprised of the following:

  • Withholding of $567 million, up $42 million from mid-month July 2020.

  • Estimated Payments of $24 million, down $131 million from mid-month July 2020. The decline was impacted by the timing factors mentioned above.

  • Returns/Bills of $20 million, down $437 million from mid-month July 2020. The decline was impacted by the timing factors mentioned above.

  • Refunds of $3 million, down $10 million from mid-month July 2020. The decline was impacted by the timing factors mentioned above.

  • Sales & Use Tax collections of $103 million for the July month-to-date period are $40 million more than the same period in July 2020. Typically, only a small proportion of expected regular sales and meals tax remittances are received by the mid-month date. The $103 million in month-to-date sales and use tax collections is comprised of the following:

    • $61 million in regular sales tax collections, up $27 million from mid-month July 2020.

    • $13 million in meals tax revenues, up $4 million from mid-month July 2020.

    • $30 million in motor vehicle sales tax revenues, up $10 million from mid-month July 2020.

Corporate & Business tax revenues were $134 million, up $54 million from mid-month July 2020. The month-to-date increase largely reflects an increase in estimated payments and return payments.

Other Taxes includes a number of tax categories such as motor fuels, cigarettes, estate taxes, room occupancy, deeds, and others. All other tax revenues totaled $75 million, which is $33 million more than mid-month July 2020.

Collections are usually weighted to the end of the month; therefore, the Department does not use the mid-month figures to project full-month revenue. Comparisons to prior-year periods are unreliable because of normal fluctuations and calendar differences in the short 15-day window of incremental data.

If you have any questions concerning this report, please contact either me (snyderge@dor.state.ma.us) or Kazim P. Ozyurt, Director of the Office of Tax Analysis (ozyurtk@dor.state.ma.us).

Sincerely,

Geoffrey E. Snyder
Commissioner

Attachment

cc:
Michael J. Heffernan, Secretary of Administration and Finance
Representative Ronald Mariano, House Speaker
Senator Karen E. Spilka, Senate President
Representative Mark J. Cusack, House Chair, Joint Committee on Revenue
Senator Adam G. Hinds, Senate Chair, Joint Committee on Revenue
Representative Bradley H. Jones, Jr., House Minority Leader
Senator Bruce Tarr, Senate Minority Leader
Deborah B. Goldberg, Treasurer and Receiver General


Mid-Month Tax Collection Report for July 2021

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