Worcester Business Journal

wbjournal.com | December 9, 2024 | Worcester Business Journal 25 Small businesses need better tax amnesty BY LUZ AREVALO AND ANGELA DIVARIS Special to WBJ M assachusetts is in the midst of a tax amnesty running from Nov. 1 to Dec. 30. Tax amnesties don't come around oen and don't last long. e Department of Revenue has mailed thousands of amnesty eligibility letters to those who have existing tax liabilities, offering them a chance at having penalties forgiven if they can pay their debt in full by the end of the year. When the Legislature included the amnesty in the state budget, it projected raising $100 million in revenue. e program will resolve the tax burdens of those who have the ability to make amends within the limited time window. A win-win, it seems, except for those distressed taxpayers who cannot quickly come up with a lump sum. It will be impossible for many low- to moderate-income taxpayers and small business owners to take advantage of the tax penalty am- nesty. Amnesties targeting a class of individuals who can pay up do not take into account individual circumstanc- es. Distressed taxpayers can settle debts another way. ough not well known, Massachusetts law includes a settlement program started in 1998. ese individual settlements are akin to personalized amnesties. In our practice, however, tax debtors with very limited resources have a much better chance at negotiating their troubles away with the Internal Revenue Service than with Mass. DOR. e IRS program is not perfect, and it is certainly not as easy as late-night infomercials make it seem, but the federal program is more accessible and transparent. Unsurprisingly, the state accepts vanishingly few offers, and practitioners are oen reluctant to even try. To fix this, the more equitable and transparent IRS model should be adopted in Massachusetts. A bill pending at the State House would update our state program. "An Act Providing for Settlement in Tax Liability" received a favorable review from the Com- mittee on Revenue and is languishing in the Ways and Means Committee. It would give more guidance to the DOR, eliminate minimum payments out of reach of many residents, and demand taxpayers granted relief re- main in compliance with their obligations for three years. By rehabilitating taxpayers who are suffering undue hardship and for whom it is impossible to repay the entire debt, we would increase tax rolls and foster future compliance. By taking into account life circumstances, we can create a more humane tax system for working-class households and small business owners. Luz Arevalo and Angela Divaris are attorneys at Greater Boston Legal Services, covering municipalities including Acton, Harvard, Littleton, Maynard, and Stow. Worcester needs to move toward a single tax rate Luz Arevalo C ommercial property owners in Worcester pay a higher tax rate than those in any other Central Massachusetts city or town. e rate of $30.04 per $1,000 of assessed property value is the only one in the region higher than $30. Worcester's commercial tax rate is even higher than Boston's $25.27 rate. e City of Worcester needs to reform its property tax structure now, by starting the process of eliminating the dual rate where residential property owners pay only $13.75, less than half the commercial rate. When the City Council on Dec. 10 goes to vote on the 2025 tax rates, they are in a position to lower the tax rate for both residential and commercial property owners, but the commercial rate should be cut by more, lessening the massive gap opened over the last four decades. e Worcester Regional Chamber of Commerce has been spearheading the campaign for a single tax rate for more than 10 years now, but it has had little success in getting the City Council to get onboard with the plan, even though a single tax rate has obvious benefits for both businesses and the residential property owners. As the chamber points out, in 1984 when Worcester implemented its dual tax rate, 45% of taxes were levied on commercial property owners. However, as the gap between the commercial and residential tax rates grew, business owners were disincentivized from investing in their properties. Many le for neighboring communities, and some to states with lower tax rates. Today, only 36% of the City's tax revenue comes from commercial property owners, a drop made more stunning considering their tax rate is now more than twice the residential rate. is strongly suggests the dual tax rate experiment, rather than lightening the tax load on residents, has actually put more of that tax burden on residential properties. In order to attract businesses to build or move here, the City of Worcester must rely on providing tax breaks to individual companies. However, these tax breaks tend to only go to larger organizations with the scale and resources to advocate for a better deal. As a result, the burden for that larger business' tax break falls on all the other taxpayers in Worcester, including residential property owners and small businesses. e aermath of the 1984 Massachusetts law allowing for dual tax rates led to an explosion of communities enacting separate rates for commercial and residential. Over the years, local governments have realized this is bad policy for both businesses and residents, and many have reformed their tax structures. Fitchburg, for example, switched back to a single tax rate in 2020 aer years of narrowing the gap between the two rates. Today, only 11 communities in Central Massachusetts have a dual tax rate, and none of them have warped the commercial/residential rates to the degree Worcester has. Adding more than 20,000 residents the city over the last decade is great, but if the Worcester City Council is serious about creating a thriving city where businesses can grow and the government has enough money to cover all the necessary services for those in need, the councilors need to start moving toward a single tax rate. Angela Divaris The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. WO R D F R O M T H E W E B WBJournal.com "Steve was one of a kind, and he'll be sorely missed by all who knew him." – Walter Dwyer, Nov. 26, on the passing of Steve Uliss, owner of Firefly's BBQ in Marlborough "David was a great promoter and had an honest sense of humor. He and his family have made Wachusett a draw for our region and a mountain with great recognition in New England." – Anonymous commenter, Nov. 22, on the passing of David Crowley, one of the five siblings who operate Wachusett Mountain Ski Area in Princeton and Worcester manufacturer Polar Beverages Facebook feedback "Finally." – John Dagnello, Nov. 28, on a proposal for a 491-unit luxury apartment complex near Worcester's Graon Street "But why? e state already attracts smart people." Robert Gallagher, Nov. 26, about Gov. Maura Healey signing a $4-billion economic development bill into law, focusing on the life sciences and climatech industries WBJ W W

• Cover