Massachusetts Unveils Limited Amnesty Program

Beginning March 16, 2015, the Massachusetts Department of Revenue is offering an aptly described “limited” amnesty program for taxpayers with certain tax liabilities. Technical Information Release 15-2.

The 60-day program applies to all corporate excise taxes imposed under G.L. c. 63 (corporate excise, financial institutions, insurance, public utilities, and banks), estate taxes imposed under G.L. c. 65C, fiduciary income taxes imposed under G.L. c. 62, and individual use tax on motor vehicles imposed under G.L. c. 64I. All penalties are covered including the onerous 20 percent penalty imposed by G.L. c. 62C, § 35A for substantial understatement of tax. The Amnesty Program will apply to tax years or periods where a Notice of Assessment was issued by the Commissioner of Revenue on or before January 1, 2015.  

The program is limited by certain conditions that may exclude or deter otherwise interested taxpayers.

  • The Commissioner of Revenue must notify taxpayers of their eligibility to participate in the Amnesty Program. Only those taxpayers to whom a Tax Amnesty Notice has been issued may be eligible.
  • The taxpayer may not contest the tax at issue. In order to participate in the Amnesty Program, the taxpayer cannot seek a refund or contest the liability of the tax amounts paid pursuant to amnesty.
  • Corporate taxpayers, to be eligible, must also be in compliance with all filing requirements with the Massachusetts Secretary of State.

The tax amnesty offered by the Department of Revenue in 2014, which involved individual income tax as well as sales and use tax, specifically included taxpayers with appeals pending. Payment of the outstanding liability did not operate to waive rights of refund or eliminate the opportunity to dispute the tax assessment. Technical Information Release 14-8.

State officials hope to receive roughly $18 million from the program. However, penalties against corporate taxpayers often arise in connection with a tax audit and subsequent assessment. In most situations, the taxpayer disagrees with the underlying tax assessment. It remains to be seen whether corporate taxpayers embrace an amnesty program that is conditioned on a waiver of all appeal rights.

Pierce Atwood LLP’s State and Local Tax Group consists of tax and litigation attorneys with decades of experience representing businesses and individuals before state and local taxing authorities throughout New England.  Our representation includes assisting clients with tax audits, challenging and resolving assessments, litigating contested tax issues, seeking refund claims before administrative tribunals and state courts, and advocating our clients’ positions before state appellate courts. Pierce Atwood attorneys routinely handle matters involving all tax types including state income, excise, sales and use, franchise, utility, telecommunications, and fuels taxes, as well as real and personal property tax.