The purpose of this Technical Information Release (TIR) is to clarify the effective date of Directive 99-1 and to provide the proper procedure for applying the Supreme Judicial Court's decision in Perini Corp. v. Commissioner of Revenue, 419 Mass. 763 (1995), cert. denied, 516 U.S. 822 (1995) to returns with tax years beginning on or before December 31, 1998.

The elections available under Directive 99-1 are available both prospectively and, to the extent the applicable statute of limitations has not expired, retroactively. However, the processes for making the election in future and past years differ. Under Directive 99-1, a corporation, effective for its first taxable year beginning on or after January 1, 1999, may elect on its return to use either the statutory formula for domestic or foreign corporations to determine whether the corporation is a tangible or intangible property corporation. In addition, an intangible property corporation, also effective for its first taxable year beginning on or after January 1, 1999, may elect on its return to use either the statutory formula for domestic or foreign corporations in calculating its net worth. To the extent that any portion of Directive 99-1 is inconsistent with these effective dates, that portion is modified and superseded by this TIR.

Taxpayers filing calendar or fiscal year returns with tax years beginning on or before December 31, 1998 cannot file a 1998 return that follows Directive 99-1 since the 1998 forms, as well as those for prior years, do not incorporate the changes required by the Directive and the Perini decision. The proper procedure for calendar and fiscal year taxpayers that wish to apply the principles of Directive 99-1 to tax years beginning prior to January 1, 1999 is to file an abatement application after filing their return. In other words, with respect to the filing of a 1998 corporate excise return and prior year returns, a taxpayer must file the return in accordance with the instructions on the applicable forms, see Schedules B and D of Forms 355A and 355B, and then file an abatement form, Form CA-6, prior to the expiration of the period for filing an abatement, see G.L. c. 62C, s. 26 and TIR 93-11. The 1999 forms will be drafted so as to allow the elections made pursuant to Directive 99-1 to be made on the return itself.

Bernard F. Crowley, Jr.,
Acting Commissioner of Revenue

TIR 99-3

February 11, 1999