June 26, 1984

You request a ruling as to whether an employer's contributions to a Simplified Employee Pension Plan ("SEP-IRA") made after the close of the taxable year are taxable for Massachusetts income tax purposes to the employee in the year contributions are actually made or in the year contributions are included in income for federal income tax purposes.

Massachusetts gross income, income which is subject to Massachusetts taxation, is federal gross income as defined under the Internal Revenue Code as amended on February 1, 1983, with certain modifications. (G.L. c. 62, §§ 1, 2).

Employer contributions to a SEP-IRA are considered to be payments of compensation and thus includible in the employee's federal gross income. (I.R.C. § 219(f)(5)). For federal income tax purposes contributions made within three and one half months after the close of a calendar year (i.e. by April 15) are treated as made on the last day of the calendar year if they are made on account of the calendar year. (I.R.C. § 404(h)(1)(B)).

Based on the foregoing, it is ruled that contributions to a SEP-IRA are included in Massachusetts gross income for Massachusetts income tax purposes in the year contributions are included in federal gross income for federal income tax purposes.

Very truly yours,

/s/Ira A. Jackson

Commissioner of Revenue

IAJ:SFR:mf

LR 84-42