Massachusetts budget bill provides for fiscal year 15 tax amnesty program
TAX ALERT |
UPDATE: The Massachusetts Department of Revenue has issued further guidance regarding the scope of the state’s fiscal year 2015 tax amnesty program. Highlights of the department’s additional guidance include:
- The tax amnesty will take place during September and October 2014.
- Taxpayers must have outstanding Massachusetts tax liabilities and must be invited by the Department to participate in the program. Tax amnesty notices showing the tax and interest due, along with the penalties to be waived, will be mailed on Sept. 2, 2014, to taxpayers who qualify. If a taxpayer pays the tax and interest shown on the bill on or before Oct. 31, 2014, the state will waive unpaid penalties for the period.
- Amnesty only applies to assessments that were on the books prior to July 1, 2014.
- Based on current guidance, the amnesty program will not apply to corporate excise taxes. The program will apply to sales and use taxes, individual income taxes, pass-through entity withholding taxes, and various other excise taxes.
The department has indicated that it intends to issue a Technical Information Release containing further details.
On July 11, 2014, Massachusetts Governor Deval Patrick signed into law H.B. 4242 (the Bill), a fiscal year 2015 budget bill that requires the Commissioner of the Massachusetts Department of Revenue (the Commissioner) to establish a tax amnesty program. Details of the program are outlined below:
Tax types and periods covered
The Bill provides that the Commissioner is to determine the scope of the amnesty program, including the particular tax types, periods covered, and limited look-back periods for unfiled returns. However, the Bill requires that certain tax types be included in the amnesty program, including: sales and use taxes; meal taxes; personal income tax withholding; pass-through entity withholding; room occupancy excises; convention center financing fees on room occupancy in certain cities; convention center financing surcharges; deeds excises; cigarette, cigars and smoking tobacco excises; club alcoholic beverages excises; gasoline excises; special fuels excises; and other excises. Additional taxes may be included in the amnesty when the program is announced by the Commissioner.
Waiver of penalties
The Bill provides that, under the amnesty program, all penalties that could be assessed by the Commissioner may be waived without the need for any showing by the taxpayer of reasonable cause or the absence of willful neglect for the failure of the taxpayer to: (i) timely file any proper return for any tax type and for any tax period; (ii) file proper returns which report the full amount of the taxpayer's liability for any tax type and for any tax period; (iii) timely pay any tax liability; or (iv) pay the proper amount of any required estimated payment toward a tax liability.
The Bill provides that the amnesty program must be established for two consecutive months in fiscal year 2015, as determined by the Commissioner. All required payments must be made by June 30, 2015, in order for amnesty program benefits to apply. If a taxpayer fails to pay the full liability before June 30, 2015, the Commissioner may retain any payments made to apply against an outstanding liability and may assess penalties.
No waiver of interest
The amnesty program will not authorize the waiver of interest or any amount treated as interest.
Future uses of tax amnesty
Any taxpayer who utilizes the tax amnesty program will be prevented from utilizing any future tax amnesty programs for the next consecutive 10 calendar years, beginning in calendar year 2015.
Although the full scope and exact timing of the amnesty program is not presently known, it is anticipated that the Commissioner will shortly announce the program and provide additional guidance. Additionally, it is anticipated that the Commissioner will provide guidance regarding program qualification requirements. Taxpayers with outstanding Massachusetts tax liabilities should keep watch for the amnesty program launch announcement and should consider at that time whether they meet program qualifiers.