On February 13, Massachusetts Governor Charlie Baker signed legislation directing the Commissioner of Revenue to establish a 60-day tax amnesty program during the fiscal year ending June 30, 2015.1 The Commissioner must determine when the amnesty program will be conducted and the scope of the program, including the particular tax types eligible for amnesty, the periods covered and the lookback period for unfiled returns. The eligible tax types must include, but are not limited to, corporate excise tax. Under the amnesty program, the Commissioner is authorized to waive all unpaid civil penalties.

Operation of Program

Participants in the amnesty program must make all required payments in full by June 30, 2015.2 If a taxpayer fails to pay the full liability by this deadline, the Commissioner will retain any payments received and apply them against the outstanding liability. In this situation, the tax amnesty program will not apply.

Taxpayers participating in the amnesty program waive any right to receive subsequent refunds or otherwise contest liability for the amounts paid under the program.3 The tax amnesty program does not apply to penalties that the Commissioner would not have the sole authority to waive including, but not limited to, fuel taxes administered under the International Fuel Tax Agreement or under the local option portions of taxes or excises collected for the benefit of cities, towns or state governmental authorities.4

To the extent that a taxpayer that wants to participate in the tax amnesty program has postponed the payment of an assessment, interest and penalty for a tax that is contested,5 the taxpayer must waive in writing all rights to further delay the payment of the tax and interest portions of the assessment under the contested tax statute.6 The tax and interest portions of the assessment are payable in full from the date of the Commissioner's notice of assessment. After the payment, the Commissioner will waive all penalties associated with that assessment.

The Commissioner is directed to establish administrative procedures to prevent a taxpayer who utilizes this tax amnesty program from participating in any future tax amnesty programs for the following 10 consecutive years, beginning in calendar year 2015.7

Waiver of Penalties

The legislation provides that penalties will be waived without any need for the taxpayer to show 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.8 The penalty liability is waived if the taxpayer files returns, makes payments as required by the Commissioner or otherwise complies with the tax laws under the amnesty program. For a taxpayer required to file annual reports with the Secretary of State, the penalty liability is waived if the taxpayer provides the Commissioner with a certificate from the Secretary, issued within 30 days of submission, indicating the taxpayer is in good standing.9

The Commissioner may waive penalties under the tax amnesty program for taxpayers who have either an unpaid self-assessed liability or who have been assessed a tax liability, whether before or after the filing of a return, and the assessed liability remains unpaid.10 However, the tax amnesty program does not authorize the waiver of interest or any amount treated as interest.11

Taxpayers Not Eligible for Amnesty

The Commissioner's authority to waive penalties under the program does not apply to a taxpayer who, before or during the tax program, is the subject of a tax-related criminal investigation or prosecution.12 Also, penalties may not be waived if the taxpayer delivers or discloses any false or fraudulent application, document, return or other statement.13 A taxpayer who delivers false or fraudulent information to the Department of Revenue in connection with an amnesty application is ineligible for amnesty and is subject to the greater of (i) applicable penalties under state law;14 or (ii) a penalty not to exceed $10,000 that is calculated and assessed according to rules determined by the Commissioner.15 This penalty is subject to the penalty laws16 and will be added to the tax due.17

Commentary

This is the second tax amnesty program that Massachusetts has enacted for the fiscal year ending on June 31, 2015.18 The fiscal year 2015 budget legislation included a tax amnesty program that the Department decided to conduct from September 1, 2014 to October 31, 2014.19 However, the last tax amnesty program applied to most tax types except for the state's corporate excise tax. The upcoming tax amnesty program expressly must include corporate excise tax and may include other tax types at the Commissioner's discretion.

The Commissioner has broad power in implementing the tax amnesty program and determining its scope. In many respects, the recent tax amnesty legislation is similar to the legislation that enacted the prior tax amnesty program. The Commissioner issued guidance for the previous program indicating that amnesty only applied to taxpayers which had been selected by the Department for unpaid liabilities which had already been assessed. At this point, it is not known whether the upcoming amnesty program will be administered in the same way. Taxpayers will need to watch for guidance from the Department concerning the implementation of the new tax amnesty program.

Footnotes

1 Ch. 2 (H.B. 52), Laws 2015. The tax amnesty program is included in legislation enacted to address the fiscal year 2015 budget shortfall.

2 H.B. 52, § 12(b).

3 H.B. 52, § 12(a).

4 H.B. 52, § 12(e).

5 MASS. GEN. LAWS ch. 62C, § 32(e).

6 H.B. 52, § 12(d).

7 H.B. 52, § 12(g).

8 H.B. 52, § 12(a).

9 Id.

10 H.B. 52, § 12(c)(1).

11 H.B. 52, § 12(c)(2).

12 H.B. 52, § 12(c)(3).

13 Id.

14 MASS. GEN. LAWS ch. 62C.

15 H.B. 52, § 12(c)(4). This penalty is subject to de minimis or other exceptions that the Commissioner may consider appropriate.

16 MASS. GEN. LAWS ch. 62C.

17 H.B. 52, § 12(c)(4).

18 Presumably, the tax amnesty program conducted earlier in fiscal year 2015 did not produce the anticipated revenue.

19 Ch. 165 (H.B. 4001), Laws 2014. For a discussion of this previous tax amnesty program, see GT SALT Alert: Massachusetts Enacts Tax Amnesty Program, Further Delays FAS 109 Deduction and Codifies Administrative Updates.

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