I. Introduction

Chapter 424 of the Acts and Resolves of 1989 authorizes the Commissioner of Revenue ("Commissioner") to waive or abate interest and penalties otherwise required to be included in use tax assessments if the use tax assessments result directly from information obtained under the Tri-State Compact among Massachusetts, Connecticut, and Rhode Island. The legislation took effect on October 17, 1989. The purpose of this Technical Information Release is to explain the legislation to taxpayers and to announce the procedures by which eligible taxpayers can request abatements or waivers of applicable interest and penalties from the Massachusetts Department of Revenue ("Department").

II. Summary of Legislation

1. Chapter 424 of the Acts and Resolves of 1989 states that the Commissioner may for good cause waive or abate, in whole or in part, interest or penalties included in deficiency assessments, for use tax assessments deriving from purchases of personal, nonbusiness goods purchased by Massachusetts residents in Connecticut and Rhode Island before June 1, 1988. Waivers and abatements of interest or penalties for use tax assessments under St. 1989, c. 424, are limited to use tax assessments for purchases of personal, nonbusiness goods by Massachusetts residents that result directly from information obtained under the Tri-State Compact among Massachusetts, Connecticut, and Rhode Island ("Tri-State Compact use tax assessments"). The interest and penalties that may be waived or abated are limited to the interest and penalties ordinarily imposed for the period between the due date of the use tax return, see 830 CMR 62C.16.2(1), and ninety days following the date of the Notice of Assessment.

2. Under St. 1989, c. 424, taxpayers may apply for abatement of interest and penalties included in any Tri-State Compact use tax assessments within the statutory deadlines for abatement under G.L. c. 62C, § 37, and, in addition, may apply for abatement at any time before or on December 31, 1991. The Commissioner's special authority to waive or abate interest and penalties included in any Tri-State Compact use tax assessments terminates December 31, 1992.

3. Under St. 1989, c. 424, if the Commissioner waives or abates interest otherwise imposed under G.L. c. 62C, § 32, for any Tri-State Compact use tax assessments, interest will accrue on any balance due for the use tax assessment if a taxpayer fails to pay the balance within ninety days of the date of the Notice of Assessment. Also under St. 1989, c. 424, the Commissioner will not impose or require the payment of the penalty for failure to pay assessment under G.L. c. 62C, § 33(c), so long as the taxpayer pays any balance owed for a Tri-State Compact use tax assessment within ninety days of the date of the Notice of Assessment.

III. Procedures for Application of Waiver

1. To apply for a waiver of interest and penalties for a Tri-State Compact use tax assessment, the taxpayer must apply for the waiver before the actual assessment under G.L. c. 62C, § 26(b). If the taxpayer receives a Notice of Intention to Assess from the Department and believes that the proposed assessment is for use tax on purchases of personal, nonbusiness goods and that the proposed assessment is based on information obtained via the Tri-State Compact agreement, the taxpayer, in writing or at the pre-assessment conference, should notify the Bureau that issued the Notice of Intention to Assess that the taxpayer believes that the Commissioner should waive any interest and penalties included in the proposed assessment. The taxpayer should include all relevant circumstances in the request for waiver. The Commissioner will determine whether good cause for the taxpayer's failure to pay use tax exists based on the facts and circumstances of each taxpayer. If the Commissioner approves the waiver, the Department will make the Tri-State Compact use tax assessment without the interest and penalties otherwise includible under G.L. c. 62C, §§ 26(b), 28, 32, 33(a), (b).

2. The Commissioner's special authority to grant waivers of interest under the provisions of St. 1989, c. 424, will terminate on December 31, 1992.

3. The Commissioner's special authority to grant waivers of penalties under the provisions of St. 1989, c. 424, will terminate on December 31, 1992, but the Commissioner will continue to consider applications for waiver of penalties before assessment, under the usual conditions and deadlines specified in G.L. c. 62C, §§ 26(b), 33(f).

IV. Procedures for Application of Abatement

1. If a taxpayer has already received a Notice of Assessment or has already been assessed for what the taxpayer believes is a Tri-State Compact use tax assessment and the assessment included interest and penalties, the taxpayer should apply for an abatement under the procedures of G.L. c. 62C, §§ 37-39, and 830 CMR 62C.37.1, except as otherwise specified in sections 2 through 5 of Part IV of this Technical Information Release.

2. Any taxpayer who wishes to apply for abatement of a Tri-State use tax assessment must file Form CA-6, Application for Abatement. The application for abatement should include the following documents, if available: a copy of the Notice of Intention to Assess, a copy of the Notice of Assessment, and a copy of any cancelled check with which payment of the assessment was made. The taxpayer should include any relevant circumstances in the application for abatement. The Commissioner will determine whether good cause for the taxpayer's failure to pay use tax exists based on the facts and circumstances of each taxpayer. The taxpayer should file the application for abatement by the deadlines specified in sections 3 through 5, below, of Part IV of this Technical Information Release.

3. All applications for abatement must be received either by the deadlines stated in G.L. c. 62C, § 37 (within three years from the due date for filing the applicable use tax return, within two years from the date of assessment, as defined by G.L. c. 62C, § 26(a) or (b), or within one year from the date of payment, whichever is later), or on or before December 31, 1991.

4. The Commissioner's special authority to grant abatement of any interest under the provisions of St. 1989, c. 424, will terminate on December 31, 1992.

5. The Commissioner's special authority to grant abatements of penalties under the provisions of St. 1989, c. 424, will terminate on December 31, 1992, but the Commissioner will continue to consider applications for abatement of penalties under the usual conditions and deadlines specified in G.L. c. 62C, §§ 33(f), 37-39.

V. Accrual of Interest and Penalty for Assessments

Not Paid within Ninety Days of the Notice of Assessment

1. Notwithstanding the Commissioner's waiver or abatement of interest for the periods between the incidence of the tax and the date of assessment for Tri-State Compact use tax assessments, interest as generally required under G.L. c. 62C, § 32, will accrue on any balance owed for Tri-State use tax assessments on the ninety-first day following the date of the Notice of Assessment if the balance owed is not paid within ninety days of the date of the Notice of Assessment.

2. Notwithstanding the Commissioner's waiver of the failure to file a return penalty under G.L. c. 62C, § 33(a), and the failure to pay penalty under G.L. c. 62C, § 33(b), for the periods between the incidence of the tax and the date of assessment for Tri-State Compact use tax assessments, the Commissioner may impose the failure to pay assessment penalty under G.L. c. 62C, § 33(c), on any balance owed for Tri-State use tax assessments on the ninety-first day following the date of the Notice of Assessment if the balance owed is not paid within ninety days of the date of the Notice of Assessment.

/s/Stephen W. Kidder
Stephen W. Kidder
Commissioner of Revenue

December 8, 1989

TIR 89-11