The Department of Revenue is responsible for enforcing the Commonwealth’s tax laws and ensuring that all Massachusetts taxpayers pay the correct amount of taxes. While Massachusetts taxpayers have a duty to pay the taxes that are lawfully due, they also have certain legal rights if they disagree with the amount of taxes that they have been assessed.
This overview is designed to provide a general description of the process available to you for appealing any tax dispute through the Department of Revenue's Office of Appeals.
The Office of Appeals
The function of the Office of Appeals is to hear tax disputes in an informal, expeditious, and consistent manner, and then to make determinations as to the correct amount of tax that should be paid.
Depending on the type of appeal involved, the Office of Appeals will conduct either a conference or a hearing with you to listen to your dispute, ask questions, request additional information or documentation if necessary, and make a determination as to how the dispute should be resolved.
The answer to how a tax dispute should be decided is not always clear. In these situations, the Office of Appeals has the authority to settle tax disputes with taxpayers by accepting less than the full amount of tax in dispute. The Department of Revenue will consider settling a tax dispute if, after taking into consideration the hazards of litigating the dispute, it is in the best interests of the Commonwealth to accept a lesser amount of tax. Likewise, you may want to settle a tax dispute with the Department of Revenue after considering the amount of uncertainty in the outcome of your dispute. You may request settlement consideration of your dispute at any time during the appeals process.
The conference, hearing, and settlement processes are combined at the Office of Appeals to afford you a single, integrated forum to resolve your dispute in an informal and expeditious manner, without time-consuming and expensive proceedings.
Types of Appeals
1. Pre-Assessment Appeals:
- You received a Notice of Intent to Assess as a result of an audit, or any other notice of a proposed tax change as a result of a routine verification of a tax return, and you disagree with the proposed tax assessment.
- An appeal is made in writing by filing a Form DR-1: Office of Appeals Form. You may also request a pre-assessment conference and settlement consideration on this form.
- You must complete a Form B-37: Special Consent Extending the Time for Assessment of Taxes, if you are requesting settlement consideration.
2. Post-Assessment Appeals:
- You received a Notice of Assessment and disagree with the tax assessment.
- You want to amend a tax return that you have already filed.
- An appeal is made by filing an Application for Abatement/Amended Return on which you can also request a post-assessment hearing.
- You may also request settlement consideration by filing a Form DR-1: Office of Appeals Form along with the Application for Abatement/Amended Return.
3. Other Types of Appeals:
The Office of Appeals also conducts conferences and hearings involving other types of disputes such as penalty disputes, manufacturing classification appeals, responsible person determinations, direct payment authority appeals, and applications for certain tax credits.
The Appeals Process
1. First Steps:
(a) Once you have filed your appeal, your case will be transferred to the Office of Appeals and assigned to an appeals officer. Pre-assessment and post-assessment appeals typically follow the same process at the Office of Appeals. If you have requested a conference or a hearing, the assigned appeals officer will schedule the conference or hearing, as appropriate, and notify you of the date and time. The conference or hearing will be conducted either in-person at the Department of Revenue’s office at 100 Cambridge Street in Boston or by telephone.
(b) The appeals officer will conduct an initial review of your case, including any information or documents that you have submitted and any documents in the Department of Revenue’s records that relate to the matter in dispute. In some instances, the appeals officer may ask you to provide additional information or documents before the conference or hearing.
2. What to Expect at Your Conference or Hearing:
(a) Conferences and hearings are informal, employing neither the rules of evidence nor testimony given under oath. No transcript or formal record of the proceedings is made. An appeals officer is responsible for conducting a conference or hearing. Either the taxpayer or the taxpayer's authorized representative must participate in a conference or hearing. In some instances, a representative of the Department of Revenue’s Audit Division or Customer Service Bureau may also attend. You must file a Form M-2848: Power of Attorney and Declaration of Representative to authorize someone to represent you.
(b) Typically, the appeals officer will begin the conference or hearing by summarizing the issues in dispute. You will then be asked to present your case by discussing the facts and legal basis to support your position. The appeals officer may then ask you questions. The appeals officer may request additional information from you, and set a deadline by which the information must be submitted in order to be considered in connection with your appeal.
3. How a Determination About Your Case is Made:
(a) The Office of Appeals will review your appeal to determine whether the amount of tax in dispute (whether proposed or assessed) is correct as a matter of law.
(b) The appeals officer will not make a determination at the conference or hearing. Rather, the appeals officer will take the matter under advisement and consider the arguments made during the conference or hearing, any materials submitted, and the relevant law. Then, after supervisor review, the appeals officer will issue a Letter of Determination setting forth the Office of Appeals' decision as to whether: (i) a proposed assessment is correct, in full or in part, as a matter of law; or (ii) an Application for Abatement/Amended Return should be granted or denied, in full or in part.
4. If You Disagree with the Determination Made by the Office of Appeals:
You have the right to appeal any final determination made by the Office of Appeals.
(a) For pre-assessment cases you may, in most cases, file an Application for Abatement/Amended Return and/or request settlement consideration after the tax is assessed.
(b) If you already had a pre-assessment conference, you will not be granted a post-assessment hearing unless you can show that a further hearing is necessary, either based on new factual information or new legal authority that was not available at the time of your pre-assessment conference.
(c) For post-assessment cases, you may appeal the determination to the Appellate Tax Board pursuant to G.L. c. 62C, § 39.
At any time while your pre-assessment or post-assessment appeal is pending at the Office of Appeals, you may request that your tax dispute be considered for resolution through a negotiated settlement.
1. How to Request Settlement Consideration:
Generally, in order to request settlement consideration, you must complete and submit a Form DR-1: Office of Appeals Form setting forth:
- the facts and issues in dispute;
- an explanation of why the tax amount in dispute is excessive or improper, including any relevant legal references; and
- your proposal for settling the dispute.
In addition, you should attach any relevant information and/or documentation to the Form DR-1: Office of Appeals Form that would assist the Office of Appeals in reviewing your settlement request.
2. Settlement Review:
An appeals officer will review your settlement proposal and, if needed, request additional information. Depending on the dollar amount in dispute, your position and settlement offer will be presented for consideration either to Office of Appeals’ management or to the Department of Revenue’s Settlement Review Board, which is generally comprised of the General Counsel, the Taxpayer Advocate, and the Director of the Office of Appeals.
If you and the Department of Revenue reach an agreement, the terms of the agreement will be formalized in a written settlement agreement to be signed by both the Commissioner of Revenue and you.
3. Other Settlement Options:
(a) Limited Information Settlements: With any appeal, you should be forthcoming with complete information and documentation. However, in some cases, you may not have or may be unable to provide any additional information or documentation regarding your case. The Form DR-1: Office of Appeals Form gives you the option to request that the Office of Appeals consider your settlement proposal based solely on the information and documentation submitted to date. Any settlement offer that the Office of Appeals agrees to may take into account the limitation on available information and documentation.
(b) Expedited Settlements: The Form DR-1: Office of Appeals Form also gives you the option to request consideration of your settlement request on an expedited basis. To receive expedited settlement consideration, the following criteria must be met:
- Your Form DR-1: Office of Appeals Form must contain a complete explanation of the facts and issues in dispute;
- Your Form DR-1: Office of Appeals Form must include a specific proposal for settlement;
- You must submit all documentation necessary to support the settlement proposal with your Form DR-1: Office of Appeals Form;
- For pre-assessment appeals, you must submit a Form B-37: Special Consent Extending the Time for Assessment of Taxes giving your consent to extend the period of time for assessment while the Office of Appeals considers your case for settlement; and
- You and/or your representative must be prepared to participate in a conference or hearing on an expedited basis and have binding authority to settle your dispute at the time of any conference or hearing.
See the Department of Revenue's settlement process for more detailed information.
(c) Early Mediation Program: The Department of Revenue also offers an Early Mediation Program for audit cases in which the Department of Revenue is proposing to assess tax of $250,000 and more. This voluntary program may be initiated at any time after a matter in controversy has been fully developed, but no later than thirty (30) days after the issuance of a Notice of Intent to Assess.
This program is a collaborative dispute resolution process, whereby an appeals officer from the Office of Appeals serving as a neutral mediator works with you and your authorized representative, along with representatives of the Department of Revenue’s Legal and Audit Divisions, in face-to-face discussions to facilitate an expeditious resolution of all issues in a disputed matter through reasonable compromise. There is no cost to you to participate in the program if you choose to have a representative of the Office of Appeals serve as a neutral mediator. Because this is a voluntary program, both you and the Department of Revenue must agree to participate in the mediation.
The mediation process is confidential. If the mediation is unsuccessful, you still have the opportunity to pursue resolution of your dispute through the traditional pre-assessment and post-assessment appeals processes, with a new appeals officer assigned to the appeal to ensure fairness and impartiality.
For more detailed information about the Department of Revenue’s Early Mediation Program, please see Administrative Procedure 635: Early Mediation Program.
1. Can I have someone else represent me?
You must file a Form M-2848: Power of Attorney and Declaration of Representative to authorize someone to represent you during the appeals process.
2. Can I appeal the interest assessed on my taxes?
No. Interest by itself may not be appealed.
3. Can I appeal the penalties assessed on my taxes?
Yes. Generally, late file/late payment penalties may be reduced in whole or in part, if you can demonstrate that your failure to file your return(s) timely or to pay your taxes timely was due to reasonable cause and not willful neglect. However, different standards apply to other types of penalties.
4. Can I file an appeal based only on my inability to pay?
No. The Office of Appeals does not have authority to reduce or abate your tax liability based on your financial condition. If you doubt you will be able to pay your tax liability, you may pursue an offer in final settlement with the Collections Bureau or hardship consideration with the Customer Service Bureau. See How Does the Collections Process Work? for more information.
5. What if I need more time to pay my tax liability?
Once the appeals process is complete, you may contact the Department of Revenue’s Customer Service Bureau, and the Contact Center may set up a payment agreement.
6. How can I stop interest from accruing?
Interest continues to accrue on any outstanding balance of tax and penalties during the appeals process. To stop interest from accruing, you must pay the underlying tax, penalties, and interest. If your appeal is successful, the Department of Revenue will pay interest on any amounts refunded.
7. Will the information in my records be kept confidential?
Your tax information will be kept confidential during the appeals process at the Office of Appeals. However, if you appeal the determination to the Appellate Tax Board, the information about your appeal may become a matter of public record.
Massachusetts Department of Revenue
Office of Appeals
P.O. Box 9551
Boston, MA 02114-9551
Deliveries: 100 Cambridge Street, Boston, MA 02114