Outside Section 15
(A) Section 17 of chapter 62 of the General Laws, as appearing in the 2008 Official Edition, is hereby amended by striking out paragraph (d) and inserting in place thereof the following paragraph:-
(d) A partner's distributive share of any item of income, loss, deduction or credit shall be determined by the partnership agreement, but that distributive share shall instead be determined in accordance with the partner's interest in the partnership, determined by taking into account all facts and circumstances, if (1) the allocation to a partner under the agreement of income, gain, loss, deduction, or credit, or any item thereof, does not have substantial economic effect, or (2) the partnership agreement does not provide as to the partner's distributive share of income, gain, loss, deduction, or credit, or item thereof. The partner shall include the distributive share of income, loss, deduction or credit in the partner's return for the taxable year during which or with which the taxable year of the partnership ends. Except as the context requires, and subject to rules or regulations that the commissioner may adopt, the determination of a partner's distributive share shall take into account rules and principles developed under the Code and federal regulations promulgated under it, adjusted as required or appropriate to properly reflect income and other tax items for Massachusetts tax purposes.
(B) Chapter 62C of the General Laws is hereby amended by inserting after section 24 the following section:-
Section 24A. (a) Tax treatment of pass-through entity items is established at the entity level. The commissioner may audit, in a unified proceeding, a pass-through entity whose members or indirect owners are subject to tax under chapters 62 or 63. Pass-through items of entities subject to unified audit procedures must be treated consistently by the pass-through entity and all members or indirect owners of the pass-through entity, except to the extent that a taxpayer member or indirect owner makes a declaration of inconsistency with its original return. For purposes of this chapter, the entity is a taxpayer.
(b) The statute of limitations for assessing tax with respect to a pass-through entity item for an entity's taxable year shall not expire before the latest of (1) 3 years after the later of the date on which the entity's return for the taxable year was filed, or the last day for filing the entity's return for that year, without extensions, or (2) an assessment period established in section 26 applicable to a taxpayer member or indirect owner. Subsections (d) and (h) of section 26 shall apply to returns filed by a pass-through entity. A member or indirect owner of a pass-through entity may file a request for an adjustment of tax attributable to any pass-through entity item for a taxable year within 3 years after the later of the date on which the entity's return for the taxable year was filed, or the last day for filing the entity's return for that year, without extensions; but such a request may not be filed after the commissioner has issued a final entity administrative adjustment. Partial or full denial of a request for adjustment of tax shall be treated as a refusal to abate or refund tax under section 39
(c) Assessment of a deficiency attributable to any pass-through entity item against members or indirect owners of entities subject to unified audit proceedings is made only after entity-level proceedings are complete. Matters determined in a unified audit proceeding are not subject to dispute by the individual members or indirect owners. The commissioner shall establish by regulation the types of pass-through entities subject to unified audit proceedings (which may include, without limitation, partnerships and S corporations), and the requirements imposed on these entities, including the designation of a tax matters partner. So far as practicable, these requirements shall be based on federal rules.
(C) Section 30 of said chapter 62C, as appearing in the 2008 Official Edition, is hereby amended by striking out the fourth paragraph and inserting in place thereof the following paragraph:-
Any person or estate failing to comply with the first paragraph shall be assessed a penalty of 10 per cent of the additional tax found due, this penalty to become part of the additional tax found due. For reasonable cause shown, the commissioner may, in the commissioner's discretion, abate this penalty in whole or in part.
(D) Section 30A of said chapter 62C, as so appearing, is hereby amended by striking out subsection (c), and inserting in place thereof the following subsection:-
(c) Any person failing to comply with subsection (a) shall be assessed a penalty of 10 per cent of the additional tax found due, this penalty to become part of the additional tax found due. For reasonable cause shown, the commissioner may, in the commissioner's discretion, abate this penalty in whole or in part.
(E) Section 31A of said chapter 62C is hereby amended by inserting after the word "62B", in line 4, as so appearing, the following words:- , section 7D of chapter 64C.
(F) Section 32 of said chapter 62C, as so appearing, is hereby amended by striking out, in line 62, the word "ninetieth" and inserting in place thereof the following word:- sixtieth.
(G) The first paragraph of paragraph (3) of subsection (e) of said section 32 of said chapter 62C, as so appearing, is hereby further amended by adding the following sentence:- For purposes of this paragraph, the date of a decision by the appellate tax board shall be determined without reference to any later issuance of finding of facts and report by the board or to any request for a finding of facts and report.
(H) Said chapter 62C of the General Laws is amended by inserting after said section 32 the following section:-
Section 32A. (a) If an obligation from an installment transaction to which subsections (a) to (c), inclusive, of section 453A of the Code applies is outstanding as of the close of any taxable year, the tax imposed by chapter 62 or 63 for that taxable year shall be increased by the amount of interest equal to the product of the applicable percentage of the deferred tax liability determined under section 453A(c) of the Code, adjusted for Massachusetts differences, including use of the applicable tax rate under chapter 62 or 63, as the case may be, multiplied by the underpayment rate in effect under subsection (a) of section 32 of this chapter.
(b) In the case of any installment obligation to which section 453(l)(2)(B) of the Code applies, the tax imposed by chapter 62 or 63 for any tax year in which payment on that obligation is received shall be increased by an amount of interest determined as follows: the amount of tax for that taxable year attributable to the payments on installment obligations to which this subsection applies shall be multiplied by the underpayment rate determined under subsection (a) of section 32 of this chapter in effect at the time of sale, which rate shall be applied for the period beginning on the date of sale and ending on the date that payment is received.
(c) The commissioner may issue rules or regulations analogous to those under sections 453A and 453 adjusted to reflect Massachusetts differences or otherwise to take account of the tax laws of the commonwealth.
(I) Chapter 64C of the General Laws is hereby amended by inserting after section 7C the following section:-
Section 7D. Every person who fails to pay to the commissioner any sum required by this chapter to be paid shall be personally and individually liable therefor to the commonwealth. The term "person," as used in this section, includes an officer or employee of a corporation, or a member or employee of a partnership or limited liability company, who as such officer, employee or member is under a duty to pay over the taxes imposed by this chapter.
(J) Subsection (H) shall be effective for tax years beginning on or after January 1, 2010, with respect to installment obligations outstanding as of the close of the tax year.
This section amends DOR administrative provisions to facilitate tax collections by: " giving DOR the authority, based on the federal Tax Equity and Fiscal Responsibility Act of 1982, to audit partnership return items at the level of the partnership rather than at the level of the partner, and clarifying how a partner's distributive share of income and other tax items are determined if the partnership agreement does not have substantial economic effect or does not provide for the determination of distributive share. " changing the penalty for failure to report a federal tax change or other state change from the lesser of $100 or 10% of the tax due to 10% of the tax due. The $100 penalty is insignificant in situations where the unreported federal change is substantial. " assisting DOR in collection of unpaid tobacco taxes by expanding the responsible persons provisions. " providing an interest charge, consistent with federal law, on certain taxpayers who defer payment of income tax through use of the installment sale method. " shortening, from 90 to 60 days, the period to appeal a state tax assessment, to conform with similar legal deadlines. " requiring taxpayers to pay taxes promptly, once they lose an appeal to the Appellate Tax Board.
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