One of the first efforts under DOR360 – an initiative launched to enhance communications throughout the DOR community – was to understand the 355U filing process for combined reporting from the perspectives of taxpayers and practitioners. A group of taxpayers with combined reporting experience joined forces with representatives from DOR’s Audit, Legal and Communications divisions to develop a survey for taxpayers and practitioners to provide us with feedback. The survey was initiated in 2014, resulting in thoughtful feedback on the filing process. Separately, the major software vendors provided their perspectives

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Simplifying Combined Reporting:
Taxpayers with combined reporting experience joined forces with representatives from DOR’s Audit, Legal and Communications divisions to review the combined reporting filing process.  After surveying taxpayers and practitioners on their filing process experiences, changes were made for the 2013 return and more changes are expected for the 2015 return. 

This is a dynamic process and the input from taxpayers and practitioners has been enormously helpful in moving this process forward.  We are particularly grateful to the external members of our 355U Working Group for taking the time to provide us with feedback on the filing process and working with us to put changes in place.   

NEW for 2015 return (to be filed in 2016)

DOR will be able to utilize the Modernized E-File Program (“MeF”) for tax year 2015 allowing the acceptance of electronic files, including federal returns, from corporate filers, resulting in the elimination of Massachusetts schedules designed to duplicate federal return information.

  • The Massachusetts Schedule NIR, which is a counterpart to a portion of the federal M-3, is being deleted for 2015 and subsequent years as we will receive the full federal schedule M-3 as a result of the MeF program.
  • To the extent an IRS Form 5471 is submitted to Massachusetts as part of the federal return under MeF, taxpayers will no longer need to submit the Massachusetts Schedule FE beginning in 2015. 
    • We are continuing to review the process for combined reports that include corporations not filing as part of a single federal consolidated return (examples: a foreign-owned business with multiple chains of corporations in the US, or a group with both S and C corporations). Pending that review, entities not included in the federal return submitted to DOR under MeF will continue to file the schedule FE for any foreign entities owned.

Three additional schedules will be dropped from the 2015 return

  • Schedule A-1: list of all 80% owned subsidiaries (the total of these amounts is/was reported on Schedule A)
  • Schedule A-2:  list of intercompany receivables (the total of these amounts is/was reported on Schedule A)
  • Schedule A-3: list of intercompany payables (the total of these amounts is/was reported on Schedule A)

Changes put in place for the 2013 return (filed in 2014)

SCHEDULES ELIMINATED FOR 2013 FILING

  • Schedule CD
  • Schedule F2
  • Schedule U-DRD
  • Schedule U-NI
  • Schedule E-2 (a revised Schedule NOL, for all corporate filers, will be filed in its place)
  • U-NOL (a revised Schedule NOL, for all corporate filers, will be filed in its place)

SCHEDULE MODIFIED FOR 2013 FILING

Schedule FE – will allow data to be transferred from IRS Form 5471 

OTHER CHANGES FOR 2013 FILING

  • ERROR MESSAGES: Unique sequence numbers were added to identify Schedule and line if rejected on e-file.
  • The 52-53 reporting method will be functional for all 52-53 week years – e.g., Taxpayers with a 52-53 week year that begins in late December will not be forced to enter January 1 as the period start date. 
  • 2014 short year returns can be reported on 2013 forms. 

FORM INSTRUCTIONS

There were some enhancements to the instructions on forms for greater clarity.

COMBINED REPORTS FOR PRIOR TAX YEARS

A taxpayer filing or amending a combined report for tax years for which electronic filing is no longer supported by the taxpayer’s software vendor will be permitted to file for those tax years on paper. 

FEEDBACK

Please give us some input on the changes to date, changes you would like to see and any other feedback that would be helpful.  Contact us at dor360@dor.state.ma.us.

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