830 CMR: DEPARTMENT OF REVENUE
830 CMR 62C.00: STATE TAX ADMINISTRATION
830 CMR 62C.00 is amended by adding the following section:
830 CMR 62C.37A.1: Settlement of Tax Liabilities
(1) General. Under M.G.L. c. 62C, § 37A, the Commissioner has authority to accept an offer which is less than the amount of tax liability owed by a taxpayer, in final and full settlement thereof. This authority is designed to effect maximum collection of taxes with the least possible loss or cost to the Commonwealth and with fairness to the taxpayer, in case of serious doubt as to liability or collectibility under the law. Any tax liability may be settled only upon a determination by the Commissioner that there is serious doubt as to either collectibility of the outstanding tax or the taxpayer's liability. The Commissioner's authority is wholly discretionary; no taxpayer has a right to a settlement under these provisions.
Assets, the taxpayer's real and personal property, tangible and intangible.
Collectibility, the ability of the Commissioner to collect, and the ability of the taxpayer to pay, the tax liability.
Concealment of assets, a placement of assets beyond the reach of the Commissioner, or a failure to disclose information relating to assets, which deceives the Commissioner with respect to the existence of the assets, whether accomplished by act, misrepresentation, silence or suppression of the truth. To illustrate, a transfer of assets for no consideration to a trust or a family member, which transfer is not disclosed to the Commissioner before acceptance of an offer in final settlement, constitutes concealment of assets.
Offer, and offer in final settlement, a formal proposal setting forth the taxpayer's proposed terms for settlement of the taxpayer's tax liability, the purpose of which is to secure the acceptance of the Commissioner and complete a binding agreement.
Parties, the persons who have entered into a settlement agreement, including the Commissioner and the two deputy commissioners designated by the Commissioner and the taxpayer and the taxpayer's authorized representative, if any.
Serious doubt as to collectibility or liability, exists when a reasonable person, viewing the controlling circumstances objectively, would conclude that the likelihood of success or recovery is less than probable.
Tax, any tax, interest or penalty assessed against the taxpayer.
(3) Factors Affecting Settlement.
(a) Prior determination by a court or the Appellate Tax Board. No tax liability will be settled pursuant to 830 CMR 62C.37A.1 on the ground of serious doubt as to liability where the taxpayer's liability for the tax has been established by a court judgment or decision of the Appellate Tax Board. No tax liability will be settled pursuant to 830 CMR 62C.37A.1 on the ground of serious doubt as to collectibility where the collectibility of the tax has been established by a court judgment or decision of the Appellate Tax Board.
(b) Fraud: frivolous offers. The Commissioner will not settle a tax liability where the Commissioner finds that the taxpayer has acted with intent to defraud. Frivolous offers and offers submitted to delay collection of tax will be rejected immediately.
(c) Waiver of limitations period. No offer in final settlement will be considered unless the taxpayer signs Form M-656, Offer in Settlement, or an equivalent document, waiving the running of the statutory period of limitations on collection of the tax, for the period during which the offer is pending and, if the settlement provides for installment payments, for an additional period ending two years after the due date of the last payment.
(a) Submission of offer. Offers in final settlement shall be submitted to the Commissioner on Form M-656, Offer in Settlement. The offer shall include a written statement by the taxpayer, signed under the penalties of perjury, setting forth the reasons why the Commissioner should settle the tax liability. The offer shall be accompanied by a remittance representing the amount of the settlement offer or, if the offer provides for installment payments, by a deposit in an amount determined by the Commissioner. An offer will not be considered by the Commissioner until the Commissioner has received a certified, cashier's, or treasurer's check or money order, drawn on a bank in the United States, or until funds have been irrevocably credited to the Commissioner's account in case of remittance in any other form, such as by personal check. Payment may be made in such other manner as may be approved by the Commissioner.
Where collectibility is in serious doubt, the taxpayer must submit Form M-433, Statement of Financial Condition and Other Information, accompanied by an affidavit signed by the preparer under the penalties of perjury, and attesting that the financial statement is accurate and that the affiant has personal knowledge of the taxpayer's financial condition; in such cases the taxpayer must also provide any other information requested by the Commissioner.
(b) Appearance before Commissioner. A taxpayer may request, or the Commissioner may require, an appearance before the Commissioner or the Commissioner's designees concerning a proposed settlement. A taxpayer has no right to such an appearance.
(c) Withdrawal or rejection of offer. An offer in final settlement may be withdrawn by the taxpayer at any time before its acceptance. In the event the offer is rejected, the taxpayer will be notified promptly by the Commissioner in writing. If an offer in final settlement is withdrawn or rejected, the amount tendered with the offer, including all installments paid, will be returned to the taxpayer without interest, unless the taxpayer has agreed in writing that the amount tendered may be applied to the liability which was the subject of the offer.
(d) Acceptance of offer. An offer in final settlement shall be considered accepted only when the taxpayer is notified in writing of its acceptance by the Commissioner. The Commissioner's acceptance of an offer may be conditioned on the posting of any security which is deemed necessary for the protection of the interests of the Commonwealth. The settlement must be approved by the Commissioner and at least two designated deputy commissioners. The written settlement agreement shall be signed by all parties and shall set forth the Commissioner's reasons for accepting the settlement and all relevant information, including, but not limited to, the names of all parties, the amount and type of tax, interest, penalties and charges settled, and the amount actually paid under the settlement agreement.
(e) Review by Attorney General. Where the Commissioner proposes to accept an amount in final settlement of tax liability, which amount is twenty thousand or more dollars less than the full amount of the tax liability with respect to which the offer is submitted, or less than fifty percent of the full amount of the tax liability with respect to which the offer is submitted, the proposed settlement will be submitted to the Attorney General for review. Any such settlement proposal shall take effect twenty-one days after its receipt by the Attorney General, unless the Attorney General objects in writing to the settlement and the Commissioner receives such objection on or before the twenty-first day after the receipt of the settlement proposal by the Attorney General. If the Attorney General objects to the settlement, it shall not take effect unless and until the objection is resolved by the Commissioner and the Attorney General.
(f) No stay of collection. The submission of an offer shall not operate to stay the collection of any tax.
(5) Effect of Settlement Agreement. A settlement agreement under 830 CMR 62C.37A.1 relates to the entire liability of the taxpayer with respect to which the offer is submitted, and such liability is conclusively settled thereby. Any portion of the liability with respect to which the offer is submitted, and the collection of which is not contemplated under the settlement agreement, will be abated by the Commissioner. Once a settlement agreement takes effect, neither the taxpayer nor the Commissioner may reopen matters covered by the agreement, by court action or otherwise, except by reason of [a] falsification or concealment of assets by the taxpayer; [b] mutual mistake of a material fact sufficient to cause a contract to be reformed or set aside; or [c] serious doubt as to collectibility, where the agreement is based on serious doubt as to liability.
(6) Confidentiality. A settlement under 830 CMR 62C.37A.1 will not be subject to the confidentiality provisions of M.G.L. c. 62C, § 21, and the Commissioner will make settlement agreements available for public inspection upon written request.
(7) Annual Report. The Commissioner shall list as Part of the Commissioner's annual report to the Governor and the General Court under M.G.L. c. 14, § 6, all settlements entered into pursuant to M.G.L. c. 62C, § 37A during the fiscal year. The report shall list the name of each taxpayer entering into a settlement agreement and the amount of the settlement.