Introduction: In general, a purchaser seeking a refund of Massachusetts sales or use tax paid in error to a vendor is required under Massachusetts law to request a refund of the amount paid from the vendor, who would then seek a refund of the tax from the Department of Revenue (DOR). See generally, 830 CMR 62C.37.1. Alternatively, in circumstances where a vendor is willing to provide a purchaser with a power of attorney, DOR has historically allowed a purchaser to seek a refund on the vendor’s behalf by filing an application for abatement. This TIR explains how MassTaxConnect (MTC), DOR’s new online return filing system, and TIR 15-13, which announced changes to DOR’s abatement process in connection with the implementation of MTC, impacts the procedures for such purchaser requests.

Refund process for vendors

A vendor may seek a refund on behalf of a purchaser.  In general, a purchaser seeking a refund of sales or use tax paid in error to a vendor must present a vendor with a resale or exempt use certificate, or other appropriate documentation. The vendor, who is formally the taxpayer in the transaction, may then seek a refund of tax from DOR for the previously reported and paid sales or use tax, with a representation that it has paid or credited, or will pay or credit, the amount of the refunded tax back to the purchaser. Prior to the introduction of MTC in 2015, a vendor filed an application for abatement to obtain a refund of tax.  As of November 15, 2015, a vendor no longer files an application for abatement to obtain such refunds. DOR’s current process pursuant to TIR 15-13 now requires a vendor seeking such a refund to use MTC to file an amended return to reduce the self-assessed tax previously reported on its return.[1]

Refund process for purchasers acting on behalf of vendors

Prior to the introduction of MTC in 2015, DOR allowed a purchaser that had secured a power of attorney from a vendor to file an application for abatement on the vendor’s behalf. See e.g., Directive 92-3.   Notwithstanding the process explained in TIR 15-13, this TIR clarifies that DOR will continue to allow a purchaser, with the vendor’s express authorization, to file an application for abatement under a power of attorney from the vendor. The purchaser may pursue an abatement claim on the vendor’s behalf by submitting a paper Form ABT, Application for Abatement.[2] DOR will treat this claim as an application for abatement under G.L. c. 62C, § 37. A purchaser seeking a refund on behalf of a vendor must file the application for abatement with a valid power of attorney prior to the expiration of the vendor’s applicable statute of limitations for filing an abatement application.[3]  All refunds will be issued to the vendor and are subject to any allowable offset or intercept. See generally, G.L. c. 62C, §§ 36, 37; and 830 CMR 62C.37.1.

In addition to the Form ABT, the submission must contain the following:
 

  • a completed Form M-2848, Power of Attorney and Declaration of Representative, whereby the vendor grants the purchaser (and/or the purchaser’s representative) a limited power of attorney,[4]
  • a conditional credit memo for the amount of the refund or other proof that the vendor has repaid or credited, or will repay or credit, the purchaser who has paid the tax to the vendor in the amount for which the application is made, and
  • an attachment summarizing the claim, listing the exempt purchases and providing an explanation of the process used to determine that the items were exempt.[5]

For further information on how to file an application for abatement and for copies of DOR forms please go to DOR’s website at http://www.mass.gov/dor/appeals-info/.

 

/s/Michael J. Heffernan
Michael J. Heffernan
Commissioner of Revenue

MJH:RHF:me

December 2, 2016

TIR 16-12



[1] An amended return showing a reduction in sales or use tax liability must be filed within the time limits specified in G.L. c. 62C, §37. Any reduction in tax liability shown on an amended return is subject to review by DOR within the applicable period of limitations prescribed in G.L. c. 62C. Any overpayments and refunds resulting from an amended return are subject to applicable statutory limitations, including those stated in G.L. c. 62C, §§ 36, 37, and 40, and refunds are subject to any allowable offset or intercept.

[2] The vendor’s electronic filing requirements will be suspended for this purpose.

[3] Both the application for abatement and the valid power of attorney must be received prior to the expiration of the statute of limitations for the application to be considered timely.

[4] A box on the Form M-2848 must be checked for the purchaser (and/or the purchaser’s representative) acting under power of attorney to receive copies of notices from DOR related to the application for abatement, including the Notice of Abatement Determination. Otherwise all notices will only be sent to the vendor.

[5] DOR may ask for additional documentation, including invoices and exemption certificates, during the review process.