TEI urges veto of proposed repeal of Massachusetts' FAS 109 deduction.

• Position: TECHNICAL SUBMISSIONS

On July 16,2015, TEI submitted a letter to Massachusetts Governor Charlie Baker urging his veto of the Legislature's proposed repeal of Massachusetts' FAS 109 deduction as part of the Commonwealth's fiscal 2016 budget. The FAS 109 deduction was adopted as part of Massachusetts combined reporting regime in 2008 and was designed to mitigate the financial reporting impact for publicly traded companies whose net deferred tax liabilities increased as a result of the shift to combined reporting. The Massachusetts Legislature repeatedly deferred the implementation of the FAS 109 deduction in its budget proposals and now seeks to eliminate the deduction entirely. TEI maintains that the elimination of the deduction will adversely impact businesses with capital-intensive operations, complicate their financial reporting obligations, break the promise made to the business community when combined reporting was enacted and undermine the Commonwealth's credibility with taxpayers. TEI's letter was prepared under the aegis of TEI's State and Local Ta Committee, whose chair is Greg Potts. Pilar Mata, Tax Counsel, coordinated the preparation of TEI's letter.

On behalf of Tax Executives Institute, Inc. (TEI), I am writing to request that you veto the Legislature's proposal to eliminate the FAS 109 deduction in the fiscal 2016 budget (Bill H3650). The FAS 109 deduction was adopted as part of Massachusetts' combined reporting regime in 2008 and was designed to mitigate the financial reporting impact for publicly-traded companies whose net deferred tax liabilities increased as a result of the shift to combined reporting. The Legislature's proposal to eliminate the deduction, after having postponed it for the past five years, upsets the settled expectations of taxpayers and harms businesses with capital-intensive operations.

TEI was founded in 1944 to serve the professional needs of business tax professionals. Today, the organization has 56 chapters in North and South America, Europe, and Asia, including Massachusetts. Our nearly 7,000 individual members represent 3,000 of the largest companies in the world. (1) As in-house tax professionals who advise their companies regarding the tax consequences of various transactions and business decisions, TEI's members have a significant interest in promoting...