Category Archives: Federal Government

More about what was in the tax bill

This from the ABA – “Pass-through businesses include partnerships, Subchapter S corporations and sole proprietorships. . . –  owners of pass-through businesses can take a 20 percent deduction for qualified business income they receive from the entity.”

There is a link to the 570 page Conference Committee report with more explanation.


Consensus tax bill includes law firms in pass-through tax relief, with limits


Law firms and other professional service entities won’t be entirely excluded from tax relief for pass-through entities in the final version of the tax bill that is awaiting passage.
The consensus provision on pass-through businesses is in many ways a victory for the ABA. The association had lobbied Congress to accept the Senate version of the tax bill giving a tax deduction to owners of pass-through businesses, including professional service firms.

The House version of the bill would have excluded law firms and all other professional service business from pass-through tax relief, and it would have lowered the maximum tax rate rather than provide for a deduction.

The conferees accepted the Senate approach, but did not eliminate caps that phase out the pass-through deduction for higher-income professional service providers. The ABA had asked conferees to drop the phase-out.

Pass-through businesses include partnerships, Subchapter S corporations and sole proprietorships. Income for such entities pass through to the owners’ individual returns, where it is currently taxed at ordinary income tax rates.

Under the consensus bill, owners of pass-through businesses can take a 20 percent deduction for qualified business income they receive from the entity, according to the Washington Post, the conference report (PDF) and the conference committee’s joint explanatory statement (PDF, see pages 20-40). Qualified business income is nonwage income that is calculated according to a formula. The deduction in the original Senate bill was 23 percent.

The tax deduction is phased out for owners of professional services businesses whose taxable income exceeds $315,000 for married individuals filing jointly or $157,500 for individuals. The threshold in the consensus bill is lower than the thresholds of $500,000 and $250,000 that were in the original Senate bill.

Many high-income law firm partners will still benefit, however, because the final tax bill lowers the top individual income tax rate from 39.6 percent to 37 percent. The bill also increases income thresholds for the higher tax brackets.

The ABA position also prevailed in regards to these provisions in the consensus bill:

• The student loan tax deduction is preserved.

• Some contingency-fee lawyers will still be able to deduct upfront litigation-related expenses. Lawyers within the jurisdiction of the San Francisco-based 9th U.S. Circuit Court of Appeals are permitted to deduct such expenses.

• There is no requirement that high-income law firms or other professional service businesses use accrual accounting. The accrual method would have forced many law firms to pay taxes on accounts receivable and other “phantom” income they hadn’t received and may never receive.

The ABA Section of Taxation had asked Congress (PDF) to preserve the deduction for tax code compliance expenses. But the final tax bill prevents a deduction for costs connected with the determination, collection, or refund of any tax unless the expenses are for the production of income.


Tax payments now might save on taxes later

This suggestion is from Needham selectman, former Norfolk County administrator, and attorney Dan Matthews – Dan suggests accelerating the payment of the rest of your FY18 real estate taxes before the end of the calendar year, if you will not get to deduct the full amount in 2018, due to the new federal tax bill (I believe local real estate taxes will only be deductible up to $10,000/year starting in 2018).

Merry Christmas!  Happy Holidays! 


Dear Friends-

If a combination of cheery greetings, politics, and tax accounting is too much for one email, please accept my Best Wishes for the Holidays and ignore the rest of this.

But it’s become apparent that as a result of the latest tomfoolery in Washington, almost every Massachusetts homeowner who will itemize deductions for 2017 can save measurably on US income taxes by pre-paying the second half of their FY18 city/town property tax (i.e., the payments that will be due in Feb and May of 18) NOW, before Dec. 31.

Not everyone can swing that on such short notice.  If your taxes are paid from mortgage holder escrow, you would have to notify the bank (and still probably have to do the prepay yourself and adjust later).  And there are only four business days left in the year.  And did we say the Holidays?

But with some exceptions, the dollar amount involved equals approximately the half-year property tax bill times your marginal US tax rate, which should make the effort worthwhile for (tens of?) thousands of people in MA, most who know little if anything about this.

I’m sending this along to friends who may be affected or themselves have friends or family it applies to.

I’m not a tax expert, and everyone’s situation is different- if you have questions, you may want to check with a tax advisor. But this is the basic information as I understand it.

Some cities/towns are posting prepayment information of their websites, and there is likely to be news information about this as well, but the window is short.

If you feel guilty about taking advantage of this break you can:

– consider it part of your patriotic duty to help show how wrong and reckless this new tax law is.

– make an additional donation to the charity of your choice (still deductible!).


I hope this is helpful.Happy Holidays!


Dan Matthews






Meetings yesterday

The Board of Selectmen held a meeting yesterday afternoon with seniors at The Center, for a no holds barred discussion of the options, status, and timing for senior housing.  I learned a lot.  Selectmen were supported by members of the Medfield State Hospital Master Planning Committee, who did the heavy carrying about explaining the status of that committee’s huge amount of work with respect to the redevelopment of the former MSH site.

Then Gus and I attended an evening regional selectmen meeting in Millis, attended by selectmen from six towns (see Medfield Press article below), where we discussed how each town is dealing with 40B, marijuana, and the new Federal stormwater rules.  I learned a lot there too.

20171207-BoS-Senior housing meeting

Region’s selectmen convene

MILLIS – Local officials from several towns led a discussion Thursday on the deficiencies and possible reform of affordable housing rules.

Selectmen from Medway, Ashland, Hopkinton, Holliston, Medfield and Millis – convened in Millis to discuss a number of issues of regional importance, such as stormwater management, retail marijuana regulation and the voting process at town meetings. The towns have met several times over the past year.

Medway Town Administrator Michael Boynton noted that the “40B” affordable housing legislation – which allows developers to circumvent certain local zoning bylaws if their project has an affordable housing component and the town falls below a 10 percent affordable housing threshold – first went into effect in 1969.

“It’s not going anywhere,” he said, noting that a ballot initiative to repeal the rule in 2010 had failed. He added that many towns, when they reach the 10 percent threshold, lose interest in reform.

Boynton said the town had experienced – in the last 18 months – both friendly and unfriendly 40B developments.

Medway Selectman Glenn Trindade said the legislation, as currently written, does not solve the affordable housing problem in the most efficient way. He said apartments are most in demand, but developers want to build houses. With apartments, he noted, the residents’ incomes are reviewed after a period of time to ensure they still quality; the same does not occur with houses or condos.

“What we’ve got with this system is someone hits the lottery (and is awarded an affordable house or condo), and you help one person,” he said.

Fellow Selectman Dennis Crowley said he was concerned about what happened to affordable housing units. He said the town had seen instances in which condo owners had bought their units, refinanced at the market value of the condo, pocketed the difference and left. He also cited incidents in which people owned the units, but moved out and rented them to other people.

“Nobody’s monitoring these units,” he said.

Boynton suggested several reforms to the law. One change would allow towns to prioritize senior housing, while another would tie developments to a municipality’s master plan.

State Rep. Shawn Dooley, R-Norfolk, noted the difficulty of changing the legislation. He said he was pursuing reforms that would allow a slightly higher-priced unit to count as a percentage of an affordable housing unity. He pointed at his hometown of Norfolk as an example of where such housing is needed.

“We’re losing teachers, firefighters and police officers – they can’t afford to live in town,” he said. “We have (affordable housing) at $130,000, and the next house up is $500,000.”

Mike Gleason can be reached at 508-634-7546 or For news throughout the day, follow him on Twitter @MGleason_MDN.

Problems for Medfield in the proposed tax legislation, per MMA

This alert from the Massachusetts Municipal Association on the proposed federal tax changes.  Current Medfield State Hospital plans would be DOA if the historic tax credits are eliminated, as plans are not viable without those HTC’s.  See other issues that are bad for towns.


Dear Osler,

The tax reform debate on Capitol Hill will have real implications for local taxpayers and municipal finance in Massachusetts – the current version that the U.S. House of Representatives will be debating next week contains provisions that would increase the tax burden on middle-class taxpayers in our state, and remove important municipal finance tools to build local economies.

Please call your Members of Congress today and ask them to protect local taxpayers by preserving the State and Local Tax (SALT) deductions, the Historic Tax Credit, and all tax-exempt bonds.

Click here for the contact information

for U.S. Representatives and Senators from Massachusetts

In coming days, both chambers of Congress are preparing to take initial votes on a wide-ranging federal tax reform bill. As currently drafted, the bill would have a negative impact on cities and towns through four major policy changes: it eliminates State and Local Tax Deductions (SALT), caps property tax deductions, eliminates deductibility of key municipal bonds, and axes the Historic Tax Credit.

Ending SALT deductions would violate a 104-year promise by the Federal Government against double taxation. This provision would have a drastic impact on taxpayers and municipal governments across the Commonwealth. Over half of Massachusetts’ taxpayers deduct state and local taxes, and all would see a painful increase in their tax burden should this bill become law. This would make it much harder for municipal and state officials to fund key services, due to the higher effective tax rate on households in Massachusetts.

Eliminating the Historic Tax Credit would harm investments in our communities. This is especially important for states such as Massachusetts, with many older buildings and factories in need of preservation and redevelopment.

Capping the property tax deduction at $10,000 would be especially painful for citizens of the Commonwealth, where there are already over two dozen communities in which the average property tax bill is higher than that limit today. Capping this deduction will make it harder for communities to fund vital services such as public schools, police and fire services, and infrastructure.

Provisions revoking the tax-exempt status of Private Activity Bonds (PABs) and eliminating Advanced Bond Refunding would damage local finances and economic development. PABs are an essential tool used to leverage private investment in much-needed local housing and economic development projects, while Advanced Bond Refunding allows taxpayers to refinance and save money on municipal bonds during economic downturns.

The MMA opposed these provisions in a press conference with Senator Edward Markey after Congressional leaders released their plan last week, because of the negative impact this bill would have on cities and towns in the Commonwealth.

Click here to read the National League of Cities’ statement opposing the elimination of SALT deductions.

Also, click here to read a letter to Congress on this issue from the NLC, signed by the MMA and 21 other state municipal associations from across the country.


It is critically important that our Congressional delegation hear from you on this issue. This bill would lead to an unprecedented double taxation of Massachusetts citizens, harm investments in local communities, and cost taxpayers more to finance municipal obligations.

A broad nonpartisan coalition is working to protect municipal concerns. Changes to tax policy should be balanced and well thought out, which is why the MMA has joined with a wide range of nonpartisan groups to protect cities and towns, including the National League of Cities, the National Governors Association, the National Conference of State Legislatures, the International City/County Management Association, the US Conference of Mayors, and the Government Finance Officers Association. US Senators Markey and Warren, and Governor Baker have all voiced opposition to eliminating key taxpayer protections, such as the State and Local Tax Deduction (SALT).

Also, the MMA would like to thank Congressman Richard Neal (1st Congressional District in Western Mass.), the Ranking member of the House Ways & Means Committee for his steadfast support of municipal concerns during the committee deliberations this week.

If you have any questions about the bill or its impacts, please do not hesitate to call or email MMA Legislative Analyst David Lakeman at 617-426-7272 at any time.



MS4, stormwater regulations, appeal status


MS4 Appeal Status

This email was forwarded by Mike Sullivan this afternoon, which email explains that the coalition of towns appealing the new federal stormwater regulations is entering a  litigation phase.

Dear MS4 Contributors,


The following update was provided to MCWRS members via our newsletter. I also wanted to share the latest information with those of you who have contributed to the appeal or plan to.


On August 24, 2016, MCWRS and the Town of Franklin jointly filed a Petition for Review of the U.S. Environmental Protection Agency’s (EPA’s) Final MA Small Municipal Separate Storm Sewer Systems (MS4) General Permit with the First Circuit Court of Appeals in Boston. Prior to the MCWRS/Franklin appeal, the Center for Regulatory Reasonableness (CRR) filed an appeal in the Court of Appeals for the D.C. Circuit, in Washington, D.C. Several events have occurred since these two initial filings. Three additional appeals were filed in the First Circuit – by the City of Lowell, the National Association of Home Builders/Home Builders Association of MA, and the Conservation Law Foundation/Charles River Watershed Association (CLF/CRWA).

The U.S. Department of Justice (on behalf of EPA) has filed a motion to transfer the appeals filed by MCWRS, Lowell, National Association of Home Builders, and CLF to the D.C. Circuit. The transfer request was triggered by the CRR appeal first filed in the D.C. Circuit, and EPA’s submittal of the Administrative Record Index to that court. The appeals are expected to be transferred. Meanwhile, in the First Circuit, MCWRS/Franklin filed a motion to intervene in the CLF/CRWA appeal on the ground that other parties in that case (i.e. EPA) would not protect the municipalities’ interests in that case. CLF/CRWA’s position is that the MS4 Permit does not go far enough. CLF/CRWA have filed motions to intervene in all of the pending appeals.

Our attorneys are prepared to submit briefs and oral arguments in the Court of Appeals for the D.C. Circuit. We will continue to keep you apprised of events related to this critically important action to protect Massachusetts communities’ interests. Read the full press release on the MCWRS website for complete details on the announcement.


Going forward, now that the appeal is filed all communications between MCWRS and its attorneys are privileged and confidential. Additionally, since as public agencies you are all subject to public records laws, we do not want to supply updates via email that may include sensitive information and strategies. Instead, we think a periodic conference call may be the safest and best way to provide our supporters with updates. Of course, we would also not want you to share details of the call content via email with anyone else in your department or other town staff as they would be subject to the same public records regulations. Please let us know if you have any questions or concerns about our planned approach to keeping you updated.


As always, we greatly appreciate your support in this important matter!


Best regards,





Kate Barrett

Vice President for Public Involvement

Regina Villa Associates, Inc.

51 Franklin Street, Suite 400

Boston, MA 02110

MS4 from EPA


This month the EPA will release its new stormwater permit rules and regulations, which are termed “MS4.”  Selectmen had a presentation on MS4 this past month by people from the Neponset River Watershed Association (NRWA), who explained the expected regulation and  shared the planning other towns are doing to respond.  Most disturbing was their representation that some towns, such as Dedham, are expecting it to cost them upwards of $1m./year to respond to those MS4 regulations.

Mike Sullivan says Medfield is fortunate to have planned ahead and has already instituted all the matters he expects will be required by the MS4 permit and its regulations, such that Mike did not think that we need to budget anything for next year to be in compliance.

The NRWA representatives indicated that many towns will be implementing fees to residents for the amount of impervious surface on their lots. Again, since Mike says we will not have extra costs, we will not need to look at such fees to cover the cost of compliance.