Massachusetts to hold 60-day tax amnesty program, including excise tax
Program timing to be determined, required payments due by June 30, 2015
TAX ALERT |
Update: On March 16, 2015, the Massachusetts Department of Revenue issued guidance regarding the state's 60-day amnesty program for the 2015 fiscal year. Per the department's guidance, the amnesty period runs from March 16, 2015, through 5:00 p.m. Eastern Daylight Time on May 15, 2015, and will cover existing tax liabilities for:
- Corporate excise taxes imposed under G.L. c. 63
- Estate taxes imposed under G.L. c. 65C
- Fiduciary income taxes imposed under G.L. c. 62
- Individual use tax on motor vehicles imposed under G.L. c. 64I
As expected, this amnesty program will not apply to non-filers, and qualified filers will be sent amnesty notices by mail to notify them of their tax and interest due. Qualified filers sent an amnesty notice, including those who entered into a payment agreement prior to the start of the amnesty and those with an appeal pending, should consider the department's assertion regarding the amount of tax and interest due and should weigh the benefit of full waiver of penalties against the requirement to waive their right to contest liabilities or receive subsequent refunds for amounts paid pursuant to the amnesty. Furthermore, qualified filers who have entered into a payment agreement should be aware that the commissioner will not waive any penalties associated with the tax liability covered by the payment agreement that have already been paid in accordance with the provisions of the payment agreement.
On Feb. 13, 2015, Massachusetts Gov. Charlie Baker signed into law a tax amnesty program (H.B. 52) that authorizes the Massachusetts Commissioner of Revenue to hold a 60-day amnesty program during the 2015 fiscal year. Details of the program are outlined below.
Tax types and periods covered
The complete scope of the program, including particular tax types and periods covered (including any limited look-back period for unfiled returns), will be determined by the commissioner. However, the amnesty program at a minimum must apply to corporate excise taxes. Notably, in determining the scope of the program, the commissioner may decline to offer participation in the program to taxpayers “in disputed tax matters where the commissioner determines that such participation would not enhance revenue collection.”
Waiver of penalties
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: (1) timely file a proper return for any tax type and for any tax period; (2) file proper returns that report the full amount of the taxpayer's liability for any tax type and for any tax period; (3) timely pay any tax liability; or (4) pay the proper amount of a required estimated payment toward a tax liability.1
This broader amnesty program allows the commissioner to waive penalties for taxpayers that have an unpaid self-assessed liability or have been assessed a tax liability, whether before or after the filing of a return, and the assessed liability remains unpaid.
To receive a waiver of penalties, taxpayers must file returns, make payments as required by the commissioner, or otherwise come into compliance with the tax laws pursuant to the tax amnesty program. Furthermore, a new requirement, which was not part of previous amnesty programs, mandates that taxpayers required to file annual reports with the secretary of state must provide the commissioner, within 30 days of the amnesty submission, a certificate of good standing from the secretary in order to participate in the program. Taxpayers participating in the amnesty program must waive any right to contest liabilities or receive subsequent refunds for the amounts paid pursuant to the amnesty.
No waiver of interest
The tax amnesty program is precluded from authorizing the waiver of interest or any amount treated as interest.
The legislation provides that the amnesty program must be established for a 60-day period in the 2015 fiscal year, with such period 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 on or before June 30, 2015, the commissioner will retain any payments made and apply those payments against the outstanding liability, and the tax amnesty program will not apply.
Future uses of tax amnesty
The commissioner will establish administrative procedures and methods to prevent a taxpayer that utilizes the tax amnesty program from utilizing any future tax amnesty programs for the next consecutive 10 years, beginning with the 2015 calendar year.
The full scope and exact timing of the amnesty program is not presently known; however, it is anticipated that this program, like last year’s more limited amnesty, will not apply to non-filers and that qualified filers will be sent amnesty notices by mail to notify them of their tax and interest due. The commissioner is expected to announce the details of the program and provide additional guidance in the near future. This is the first Massachusetts amnesty program in several years that has included corporate excise tax. Thus, taxpayers that have not been eligible to participate in prior tax amnesty programs should watch for the amnesty program launch announcement and consider at that time whether they meet program qualifiers.
1 Note, the amnesty will not apply to penalties related to taxes that the commissioner does not have sole authority to waive, such as fuel taxes administered under the International Fuel Tax Agreement (IFTA) or the local option portions of taxes or excises collected for the benefit of cities, towns or state governmental authorities.