This Technical Information Release (TIR) explains the personal income tax provisions contained in St. 2000, c. 79, An Act Relative to Income Taxation and Certain Income Eligibility Calculations for Certain Recovered Assets of Holocaust Survivors (the Act). The Act amends G.L. c. 62, § 2(a)(2) by adding subparagraph (K). (1) The provisions of the Act apply to tax years commencing on or after January 1, 1998.
Massachusetts gross income is federal gross income with Massachusetts modifications. G.L. c. 62, § 2. A recently enacted modification added subparagraph (K) to G.L. c. 62, § 2(a)(2). Under G.L. c. 62, § 2(a)(2)(K), and subject to the definitions contained in this TIR, the following items are deductible from federal gross income, to the extent included therein, in determining Massachusetts gross income:
1. Distributions or payments, including interest, if any, made to an individual taxpayer because of his/her status as a victim of Nazi persecution or due to the taxpayer's status as an heir to such victim, so long as the victim or heir of a deceased victim, as the case may be, is the first recipient of such property or assets.
2. Income attributable to, derived from, or in any way related to, stolen assets. Such income may include compensation, reparation, or interest on and the proceeds of insurance policies issued to a victim of Nazi persecution by European insurance companies immediately prior to or during World War II.
With regard to income attributable to the stolen assets, the deduction is allowed only to that taxpayer who either was a victim of Nazi persecution or who is an heir of such victim and who was also the first recipient of the stolen assets after recovery. Moreover, this deduction does not apply to income attributable to property that victims acquire using or spending recovered assets or acquire with proceeds from the sale of the recovered assets. Example: A victim recovers stolen shares of stock that he sells to purchase shares in a mutual fund. The income derived from mutual funds is not deductible from gross income under G.L. c. 62, § 2(a)(2)(K).
For purposes of this TIR the following terms shall have the following meanings:
"Victim of Nazi persecution" or "victim": an individual persecuted for racial or religious reasons by Nazi Germany or any other Axis regime; and
"Stolen Assets": Assets that Nazi Germany or any other Axis regime stole, expropriated, confiscated or wrongfully took immediately prior to, during, or immediately after World War II from victims of Nazi persecution.
Taxpayers who have already filed returns for tax years beginning on or after January 1, 1998 and who have included items of income described above in their Massachusetts gross income may file amended returns or abatement applications, subject to the limitation periods for filing amended returns or abatement applications. Generally, the amended return or abatement application must be filed within three years from the original due date of the return, within two years from the date of an assessment or deemed assessment, or within one year from the date the tax was paid.
Frederick A. Laskey
Commissioner of Revenue
September 1, 2000
1 The Act also contains a section requiring that any recovered asset, distribution or restitution payment that is excluded from Massachusetts gross income shall also be excluded for the purpose of determining eligibility for any income-guideline or income-eligible program in Massachusetts. See St. 2000, c. 79 § 2.