We’ve been keeping close track of the Massachusetts Privacy Law, with some recent comments specifically about the compliance work nonprofits will need to perform.  Halfway to the deadline, now, and we encourage organizations of all types to do a quick check of where they stand, as the penalties for noncompliance will be steep.

To get more information, you can also check out this archived MFA webinar.

A reminder that May is fast approaching, and with it comes the deadline for companies to apply to be considered for the Massachusetts Life Sciences Tax Incentive Program. That date is May 15, and qualifying companies will benefit from the $1 billion investment Massachusetts is making in life sciences over 10 years.

Specific tax incentives include an Investment Tax Credit for 10% of the cost of qualifying property, of which 90% may be refundable, as well as new credits for certain R&D, changes to existing R&D credits (again, of which 90% may be refundable) and an extension of the Net Operating Loss carryforward from 5 to 15 years.

We outline these incentives and more in this Tax Alert, and of course feel free to comment or contact us with questions.

In November of last year we called attention to pending changes to the privacy law in Massachusetts that protects state residents’ personal information, and we’ve also just come out with a Perspectives article that details the steps to compliance.  However, good news for companies who deal with this kind of personal data: On February 12, 2009, the Massachusetts Office of Consumer Affairs and Business Regulation (“OCABR”) once again revised its personal information security regulations and postponed the effective date until January 1, 2010.

This means more time to digest the new regulations and act accordingly.  To that end, we’ve scheduled a webinar to review the standards on Tuesday, March 10, and we invite you to register and listen in.  We will be sure to report back after the online event!

As we keep our feet under us making the transition to a new year, we also have to keep our eyes on changes to the tax code that will impact filers. Every state has its annual updates, and we did an extensive walkthrough of Massachusetts changes at our tax seminar towards the end of 2008.

An online version of state-specific information is posted here, and some highlights include:

- significant incentives designed to spur innovation, especially for life sciences companies

- combined reporting that alters the way multi-state corporations will calculate income

- corporate tax rate reductions that better align C corps and S corps

We encourage you to check out the presentation, and to let us know if there are other 2009 questions that we should take a look at.

The Commonwealth of Massachusetts enacted a law in September protecting state citizens’ personal information. Originally scheduled for January 1, 2009,  the law will now take effect for all Massachusetts businesses and third party providers beginning May 1, 2009, with other requirements coming into effect January 1, 2010.  The law intends to protect employee personal information from unauthorized access and possible exploitation.

Personal information to be protected includes a person’s name and address, combined with complete social security number, driver’s license or other state-issued number, complete credit card or bank account numbers.

Companies that do keep this information will need to take some prescribed steps towards compliance.  They must:

1.  Establish written policies and procedures for the protection of these files, both in the electronic and physical formats.

2.  Be able to justify the need for all such information kept in house. Obviously employee data is needed to for tax, 401K, and insurance withholdings. But for client records is it possible to only maintain the last four digits of a credit card number?

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This summer marked the passage of some noteworthy tax reform in Massachusetts that will be on our minds as year-end strategies start to take shape. Specifically, Governor Patrick signed an Act Relative to Tax Fairness and Business Competitiveness that his office says will close some corporate loopholes while reducing income tax obligations.

Key components of the Act include a combined reporting element that goes into effect next year and will have a significant impact on multi-state operations accustomed to filing separate returns; Massachusetts conformity with federal business entity classification; and reduction in overall corporate tax rates beginning in 2010.

While the tax reform generates additional income for the state — up to $482 million, according to the Massachusetts Business Roundtable — the changes create an interesting balancing act for companies. Depending on the extent of local operations, they may need to look at how much their in-state infrastructure will affect their tax payments.

We will take a more indepth look at the reforms for our annual tax seminar in the Fall, and in the meantime will continue to monitor major developments that take effect in 2009.