In John S. Lane & Sons, Inc. v. Commissioner, 396 Mass. 137 (1985), decided November 4, 1985, the Supreme Judicial Court upheld the Commissioner's authority to determine that a corporation which had been granted manufacturing classification pursuant to G.L. c. 58, § 2 was not in fact engaged in manufacturing during any open taxable year, to revoke that classification, and to assess any corporate excise then legally due to the Commonwealth, under G.L. c. 62C, § 26(b). An "open taxable year" is any taxable year within three years after the later of the date the return was filed on the date it was required to be filed. G.L. c. 62C, § 26. The Court stated that the Commissioner did not violate the taxpayer's constitutional rights by assessing a tax that was lawfully due under procedures firmly established at the time the deficiencies were assessed.

Accordingly, a corporation classified as a manufacturing corporation is not eligible for an investment tax credit under G.L. c. 63, § 31A unless it is actually engaged in manufacturing. The classification does not preclude the Commissioner from reviewing the factual issue on audit, or from assessing deficiencies against the corporation resulting from a denial of investment tax credits claimed during open taxable years in which the corporation held the classification.

Ira. A. Jackson
Commissioner of Revenue

September 22, 1986

TIR 86-3