MASSACHUSETTS RECOVERS MILLIONS IN REVENUE

Massachusetts Recovers Millions in Revenue by Reducing Employer Fraud and Worker Misclassification

BOSTON – Thursday, September 5, 2013 – Labor and Workforce Development Secretary Joanne F. Goldstein today announced Massachusetts has recovered more than $21 million over an 18-month period in owed revenue recaptured through the collaborative work of the state's Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (the Joint Task Force). This recovered amount is greater than the sum of all previous years combined as detailed in the Joint Task Force's 2012 Annual Report.

In March 2008, Governor Deval Patrick established the Joint Task Force to restore fairness to the Massachusetts economy by addressing employer fraud and misclassification. Working towards this goal, the Joint Task Force is composed of various state agencies including representatives from the Executive Office of Labor and Workforce Development (EOLWD), as well as other executive branch agencies, the Office of the Attorney General's Fair Labor Division, the Office of the Treasurer's Alcoholic Beverages Control Commission and the Insurance Fraud Bureau.

"Thanks to Governor Patrick's leadership, the Joint Task Force continues to successfully work together to confront fraud and abuse among employers, to provide an equal playing field for all businesses to compete in Massachusetts and to protect workers," said Secretary Goldstein. "While each participating agency has the ability to recoup revenue on its own, our collective efforts provide greater enforcement and compliance, yields significantly more in revenue for the Commonwealth and delivers better outcomes for both employees and employers in the state."

Joint Task Force agencies work together to reduce fraud and abuse within the "underground economy," a term often referred to those individuals and businesses that choose to conceal or misrepresent their employee population to avoid one or more of their responsibilities related to wages, payroll taxes, insurance, licensing, safety or other regulatory requirements. Often the employees are mischaracterized as independent contractors or paid in cash to avoid these obligations. The underground economy also encompasses other activities such as tax evasion, payroll fraud, under-the-table work and wage theft.

"The collaborative efforts of the Joint Task Force have worked successfully to bring businesses and individuals into compliance with our state laws," said Attorney General Martha Coakley. "The money recovered this year demonstrates both the scope of the problem and our aggressive response to combat fraud and abuse.  As the state's sole wage enforcement authority, our office will continue to take action to protect workers, stop unlawful business practices and level the playing field for all companies."

The Joint Task Force's 2012 Annual Report describes a breakdown of recovered funds and details noteworthy accomplishments and results achieved between July 2011 and December 2012, the most recent period of available collected data. During this 18-month period, Massachusetts recouped $21.39 million in owed revenue and ensured greater compliance with the state's labor, licensing and tax laws.

Among notable accomplishments was the collection and disbursement of $1.17 million in unreported wages by subcontractors on the Marriott Copley Place, Boston (Host Hotels) renovation project, following a multi-month Joint Task Force investigation that began in the fall of 2011. Joint Task Force agencies also identified sub-minimum wage payments to workers; employers without workers' compensation insurance policies; misclassification of workers; and unpaid Unemployment Insurance taxes by contractors and subcontractors working on this renovation project.

"The Joint Task Force is an excellent example of good government at its best and is validated by proven results," said Heather Rowe, Director of the Department of Labor Standards and Interim Director of the Joint Task Force. "Along with our success stories, we are increasing awareness and forging a successful partnership among responsible business owners, labor, advocates, and government to bring fair employment conditions to Massachusetts and stem unfair competitive advantages some individuals seek."

Member agencies of the Task Force also regularly conduct cross agency compliance checks. An example of this cooperative partnership included a joint effort between DUA's Revenue Audit Department, the Alcohol Beverages Control Commission, Division of Capital Asset Management and Maintenance, Department of Career Services, Department of Industrial Accidents and Department of Labor Standards to track down unpaid taxes, fees and assessments. Over this 18-month period, the state recovered more than $17 million from employers in unpaid unemployment taxes. Of this $17 million, close to $13 million was generated in 2012 alone, nearly double the amount collected in 2011. 

"The work of the Task Force is invaluable in reducing the growth of the underground economy in the state's construction industry," said Mark Erlich, Executive Secretary-Treasurer of the New England Regional Council of Carpenters. "Taking on the illegal practices of wage theft, misclassification and tax and insurance fraud creates a more level playing field, which ultimately benefits legitimate employers, tradesmen and women and taxpayers."

"When businesses cheat in the underground economy, it is very tough for good businesses to compete," said Greg Beeman, President of the Massachusetts Chapter of Associated Builders and Contractors. "This, in turn, means fewer legitimate 'above ground' jobs for Massachusetts' workers. In hard hit industries like construction, what Secretary Goldstein and the Task Force are doing to keep a level playing field is an important part of the recovery."

Now in its fifth year, the Joint Task Force is focused on an expanded set of goals and objectives including: 1) Advancing technological capabilities for capturing and tracking referrals; 2) Building upon existing channels of multi-state and federal cooperation and maximizing future potential cooperation; 3) Completing the Task Force research study on employee misclassification and the underground economy in Massachusetts; creating education and outreach material for businesses and workers; 4) Continuing to provide and expand cross-agency training opportunities; expanding Task Force partnerships outside the Executive Branch Agencies; and 5) Working towards implementing objectives to achieve the strategic goals set by EOLWD to increase transparency in government as part of Governor Patrick's MassResults Plan.

To learn more about the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification or to read the Massachusetts Underground Economy and Employee Misclassification 2012 Annual Report, visit www.mass.gov/lwd/jtf.

Workers who believe that their rights have been violated and businesses who believe they are at an economic disadvantage because of unscrupulous competitors are strongly urged to call the Attorney General's Fair Labor Hotline at (617) 727-3465 or the Joint Task Force Referral Line at (877) 965-2267, email tips to jtftips@state.ma.us, or visit the Joint Task Force website at www.mass.gov/lwd/eolwd/jtf/ to submit complaints. More information about the wage and hour laws is also available in multiple languages at the Attorney General's Workplace Rights website at www.massworkrights.com.

MassDOR: Tax Preparation Video for 2013

What changes in either the Federal or MA taxes could affect how you file for this year? This video from the Mass Dept of Revenue walks through the changes.

The video takes about 23 minutes

Municipal Calendar

From the MA Dept of Revenue, Division of Local Services "City & Town" Newsletter for July 2010 comes the following. I don't pretend to know this in detail. It may very well go over your head too. The point of sharing it is as many folks head into vacation time, there is much still to be done in the Municipal Building. The fiscal year just closed June 30th, which means the books need to be closed, accounts balanced, etc. The following provides some detail into the behind the scenes stuff that just happens!

Municipal Calendar

July 1: Collector:Mail Annual Preliminary Tax Bills

For communities issuing annual preliminary tax bills, the preliminary quarterly or semi-annual bills should be mailed by this date.

July 15: Accountant: Certification Date for Free Cash: Anytime after Books are Closed

Two weeks after the close of a fiscal year, all accounts are closed out and the resulting balance sheet and supplemental documentation submitted to DOR. Free cash is certified any time after this date.

July 15: Accountant: Report Community Preservation Fund Balance: Anytime after Books are Closed After the close of a fiscal year, the fund balance is submitted to DOR (Form CP-2) and notice given to the Community Preservation Committee and other financial officers. The fund balance may be appropriated anytime after that report.

July 15:School Business Officials: Certification Date for Excess and Deficiency (E&D) Fund

Two weeks after the close of a fiscal year, all accounts are closed and the resulting balance sheet (a pre-closing trial balance or audited financial statements will not be accepted unless requested by the Director of Accounts) and supplemental documentation are submitted to DOR. E&D Fund is certified any time after this date.

July 15: Assessors: Deadline for Appealing Commissioner’s Pipeline Valuations to ATB

July 20: DOR/BLA: Notification of Changes in Proposed EQVs (even numbered years only)

July 20: DOR/BLA: Notification of Changes in Proposed SOL Valuations (every 4th year after 2005)

August 1: Taxpayer: Quarterly Tax Bills — Deadline for Paying 1st Quarterly Tax Bill Without Interest

According to M.G.L. Ch. 59, Sec. 57C, this is the deadline for receipt of the 1st Quarter preliminary tax payment without interest, unless the preliminary bills were mailed after July 1. If mailed by August 1, the 1st Quarterly payment is due August 1, or 30 days after the bills were mailed, whichever is later, and the 2nd Quarterly payment is due November 1. If mailed after August 1, the preliminary tax is due as a single installment on November 1, or 30 days after the bills were mailed, whichever is later.

August 1: Taxpayer: Annual Boat Excise Return Due

August 1: Accountant: Notification of Total Receipts of Preceding Year

The total actual local receipts (e.g., motor vehicle excise, fines, fees, water/sewer charges) of the previous fiscal year must be included on Schedule A of the Tax Rate Recapitulation Sheet (Recap) which is submitted by the Assessors to DOR. On the Recap, the Accountant certifies the previous fiscal year’s actual revenues, and the Assessors use this information to project the next fiscal year’s revenues. Any estimates of local receipts on the Recap that differ significantly from the previous year’s actual receipts must be accompanied by documentation justifying the change in order to be approved by the Commissioner of Revenue.

August 1: Assessors: Deadline for Appealing EQVs to ATB (even numbered years only)

August 1: Assessors: Deadline for Appealing SOL Valuations to ATB (every 4th year after 2005)

August 15: Assessor: Deadline to Vote to Seek Approval for Authorization to Issue Optional Preliminary Tax Bills For semi-annual communities issuing optional preliminary property tax bills, the Assessors must vote to seek authorization to issue the bills from DOR by this date. After receiving approval, Assessors must submit a Pro-forma Tax Rate Recap Sheet to DOR for review and issue the tax bills by October 1.

August 31: Taxpayer: Last Filing Day for Classified Forest Land, M.G.L. Ch. 61

August 31: DOR/BOA: Issue Instructions for Determining Local and District Tax Rates A copy of the Tax Rate Recap Sheet and its instructions are forwarded to the town.

August 31: Assessors: Begin work on Tax Rate Recapitulation Sheet (to set tax rate for semi-annual bills) Until the Tax Rate Recap Sheet is completed and certified by the Commissioner of Revenue, the community may not set a tax rate nor send out its property tax bills (unless it issues preliminary quarterly tax bills or requests from DOR the authority to send out pre liminary tax notices if DOR requirements are met). Communities should begin gathering the information in enough time for the tax rate to be set and tax bills mailed by October 1. The Tax Rate Recap Sheet provides Mayors or Selectmen with a ready-made financial management tool because the town’s most important financial management information is summarized on this form. The Mayor or Selectmen should review the Recap Sheet in preliminary form in order to understand the following financial information: Page 1 (Tax Rate Summary) — The proposed tax levy should be compared to the levy limit. If a town does not levy to its limit, the remaining levy is referred to as excess levy capacity. Excess levy capacity is lost to the community for the current fiscal year although it will always remain in the levy limit calculation. Page 2 (Amount To Be Raised) — This section includes appropriations and other local expenditures not appropriated. These include overlay deficits, revenue deficits, state and county charges, Cherry Sheet offset items, and the allowance for abatements and exemptions. By comparing this information to the prior year(s), any significant changes can be determined. Page 2 (Estimated Receipts & Revenues From Other Sources) — In particular, Sec tion C shows the amount appropriated from free cash and other available funds. By comparing the amounts appropriated to the balances in these accounts (available from the Accountant/Auditor), the Mayor or Selectmen can get a sense of how their non-property tax revenues are being used. Page 3, Schedule A (Local Receipts Not Allocated) — By comparing these figures to prior year(s), the Mayor or Selectmen can determine any changes in these revenues. Page 4, Schedule B (Certification of Appropriations and Source of Funding) — This section includes financial votes of City/Town Council or Town Meeting not previously reported on last year’s recap.

Franklin, MA