If you want to contest a DOR assessment or decision, the law protects your right to do so. Taxpayers have the right to dispute the Department's determination on a tax issue as well as its finding of fact through appeal or by requesting settlement consideration. As a taxpayer, it is important that you understand how to appeal or otherwise resolve a finding and what the best route may be to do so.
Although most people handle their own cases before DOR, taxpayers also may want to consult a tax practitioner for advice. At the end of this section, there are some suggestions for how to find a tax practitioner who can represent or advise you further.
It is also important to know that filing an appeal does not stop interest or late-pay penalty charges from accruing on any unpaid tax liability. Filing an appeal will stay the accrual of late-pay penalties on any unpaid contested amounts for taxpayers who have been audited. Involuntary collection activities will be suspended for all taxpayers whether audited or not, while an abatement is pending with DOR or upon subsequent appeal to the Appellate Tax Board or Probate Court.
Please see "How do I request settlement consideration?" for detailed information about the settlement process. The Office of Appeals has the authority to resolve tax controversies as to liability prior to assessment or denial of an Application for Abatement.
Are there rules on how much time I have to appeal a DOR decision?
Yes. Every type of appeal has a strict deadline within which a taxpayer must start the appeals process, and all are explained in this section. It is very important to make sure that deadlines are met because DOR does not have the legal obligation to open a case once the time for filing an appeal has expired.
What if I made a mistake on my return and overpaid my taxes? How can I get my money back?
If you overpaid, or if the Department discovers a simple arithmetic error that caused you to overpay, DOR automatically will refund your money.
If, however, you believe the tax amount you reported and paid was incorrect, you may apply for a refund by filing an amended return. An amended return is just a new revised return. Some taxpayers are required to file amended returns electronically. For more information, see TIR 16-9, Expansion and Restatement of Electronic Filing and Payment Requirements.
Many taxpayers can use the "amend" feature of their MassTaxConnect account to make changes to previously filed tax returns. If amending on MassTaxConnect is not an option and you are not required to file electronically, you can check the amended return box on your paper return and file it the way you usually do.
I already paid a bill that DOR sent me, but I think it was wrong. What should I do?
Once a bill has been generated by DOR, taxpayers must file an Application for Abatement (either online through MassTaxConnect or by submitting Form ABT) if they are looking for a refund of a payment. Most taxpayers can use MassTaxConnect to dispute an audit finding or a penalty by choosing "File a Dispute" under "I Want To" in their account for each tax type.
Keep in mind that some taxpayers are required to file amended returns and applications for abatement electronically. Refer to TIR 16-9, Expansion and Restatement of Electronic Filing and Payment Requirements, to see if the electronic filing and payment requirements apply to you.
Are there time limits for filing an amended return or an application for abatement?
Yes. A person aggrieved by the assessment of a tax may file an abatement or amended return at any time
- within three years from the date of filing the return (or the prescribed due date if the return is filed early),
- within two years from the date the tax was assessed or deemed to be assessed, or
- within one year from the date that the tax was paid, whichever is later.
Where a return is filed either on or before the prescribed due date (determined without regard to any extension of time to file), an application for abatement or an amended return may be filed within three years from such due date for the return. Where a return is timely filed on extension, an application for abatement may be filed within three years from the actual date of filing the return. Also, where a return is not timely filed, an application for abatement may be filed within three years from the date of filing the delinquent return. Please note, there are also independent time limits for requesting a refund, see MGL c. 62C, § 36.
I've been audited, and I don't agree with what the auditor says I owe. What do I do now?
If an auditor determines that you owe a tax as a result of a field audit and you don't agree, you can arrange an exit conference with audit staff. The exit conference is an opportunity for you to gain a thorough understanding of the basis for the proposed assessment and to make sure that the facts of your case are developed as fully as possible. This conference may help you avoid entering into the formal appeals process altogether.
If matters are not resolved at the exit conference - or if an auditor determines that you owe a tax as a result of a desk audit - a Notice of Intent to Assess (NIA) will be issued. (Please see "How are audits done?" for field and desk audit explanations.)
How do I appeal the Notice of Intent to Assess?
If you disagree with an NIA, you can request either a conference or settlement consideration with DOR's Office of Appeals. The Office of Appeals is a separate office within DOR that operates under the auspices of DOR's Commissioner.
If you request a pre-assessment conference or settlement, the request must be made in writing, via Appeals Form (Form DR-1 ), and postmarked within 25 days of the issuance date of the NIA. Taxpayers should submit with their conference or settlement request a complete and accurate written statement of the facts and legal questions involved. Taxpayers must submit a Special Consent Extending the Time for Assessment of Taxes (Form B-37 ), which extends the "open period" for making an assessment.
If, after conducting a conference, the Office of Appeals determines the tax is owed, you will receive a letter of determination explaining the reasons for upholding the tax, and DOR will send you a Notice of Assessment (NOA). Similarly, if settlement is pursued but not reached, this fact will be confirmed in writing and an NOA will be issued.
I just received a bill, but I've never been audited. How could that happen?
NOAs, or bills, are sent to taxpayers either as the result of an audit, as explained above, or as the result of DOR's routine verification of a taxpayer's records. If there has not been an audit, an assessment of an amount due may have been made because an arithmetic, clerical or other obvious error on the return was detected. An assessment may also be made because of the omission of a necessary schedule or document (e.g., the failure to include a schedule HC). In this situation, DOR automatically issues an NOA to the taxpayer.
In addition, effective for returns filed on or after July 1, 2003, the Commissioner may correct returns based upon information from third party sources, and assess a deficiency attributable to omission of taxable income without giving prior notice to the taxpayer. In general, the taxpayer has 30 days from the date of the assessment to challenge the change, otherwise the corrected assessment will become final with no further action on the part of the Department or the taxpayer. For more information, please see TIR 03-18, Changes to G.L. c. 62C Contained in the Fiscal Year 2004 Budget.
If a taxpayer has questions about a bill, he or she should call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
I have received a Notice of Assessment, and I don't agree with it. How do I appeal this bill?
If you receive a Notice of Assessment that you want to protest, you must file for an abatement. You may use MassTaxConnect to submit an online abatement application by using the “file a dispute” option. Once an online abatement application or an Application for Abatement (Form ABT) is filed, late-pay penalties do not continue accrue on unpaid disputed amounts resulting from an audit assessment. Involuntary collection activities are stayed on all unpaid contested amounts whether resulting from an audit assessment or not, while a taxpayer appeals the assessment. Under certain circumstances, DOR may, by written notice, require taxpayers to post security while unpaid assessments are appealed if the tax amount is greater than $5,000. Since you have been billed, you should remember that if you choose not to pay at this stage, interest and, where applicable, late-file and late-pay penalties, will continue to accrue on any unpaid amount while the appeal is pending. Choosing to pay at this time will not affect the outcome of your appeal.
Your application for abatement, filed either online or by submitting Form ABT, must be filed within the statute of limitations. See 83) CMR 62C.37.1for additional information regarding abatements. The Contact Center Bureau can answer your questions, including how much time you have to file an application for abatement. For more information or to obtain forms, please call the Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
Most taxpayers can use MassTaxConnect to dispute an audit finding or a penalty by choosing "File a Dispute" under "I Want To" in their account for each tax type. Keep in mind that some taxpayers are required to file amended returns and applications for abatement electronically. Refer to TIR 16-9, Expansion and Restatement of Electronic Filing and Payment Requirements, to see if the electronic filing and payment requirements apply to you.
Any taxpayer filing for abatement has the right to request an abatement hearing. A hearing is granted only when DOR intends to deny the claim, in part or in full, and if the taxpayer requests a hearing in writing on the original abatement application or prior to DOR making any formal determination on that application. These hearings are conducted by the Office of Appeals.
DOR may request additional information while reviewing the taxpayer’s abatement claim. A taxpayer's abatement application will not be considered filed unless properly documented. If a taxpayer fails to respond to a request for further documentation or substantiation within 30 days from the date of the request, the Department may deny the claim without any requested hearing. In that case, the taxpayer will be notified that the abatement is being denied based on lack of sufficient information.
Taxpayers who already have had a pre-assessment conference with the Office of Appeals following an audit and who are petitioning for a hearing on the abatement request will not be granted a hearing unless the taxpayer establishes that there is new factual information or new legal precedent that was not available to the taxpayer at the time of the pre-assessment hearing, or the taxpayer raises a new issue not considered at the preassessment hearing.
If your abatement is granted and you already have paid the bill, your money will be returned to you along with any accumulated interest, calculated from the date of the completed and substantiated abatement application.
Please also see "How do I request settlement consideration?" for information about settlement consideration during the abatement stage of a tax dispute.
How do I appeal an abatement decision with which I don't agree?
If your abatement application is denied, you have the right to appeal your case directly to the Appellate Tax Board (ATB) of the Commonwealth of Massachusetts. The ATB is an independent, quasi-judicial administrative board that hears appeals of abatement applications after they have been denied in whole or in part by DOR. (Please see "Are appeals beyond DOR possible?" for more information on the ATB.)
If I want to appeal a decision, do I first have to pay the amount that DOR says I owe?
A taxpayer is not obligated to pay a disputed audit assessment (or portion thereof) for the first 60 days following the date on which the Commissioner gives notice of the audit assessment, and, subsequently, while the taxpayer appeals the audit assessment by filing an abatement with DOR or a subsequent appeal with the ATB or Probate Court. A taxpayer is not obligated to pay a disputed non-audit assessment (or portion thereof) while the taxpayer appeals the assessment by filing an abatement with DOR or a subsequent appeal with the ATB or Probate Court. Under certain circumstances, DOR may, by written notice, require taxpayers who otherwise are not obligated to pay a disputed assessment, to post security while assessments are appealed, if the tax amount exceeds $5,000.
Many taxpayers will pay a contested tax in order to prevent interest charges and applicable penalties from accruing. If an abatement is granted, a refund of any resulting overpayment plus applicable interest will be made to the taxpayer.
As discussed above, if DOR denies an abatement claim, a taxpayer is not required to pay the disputed liability before the Appellate Tax Board (ATB) can hear his or her case. However, under ATB rules, a minimum filing fee of $65 (the fee is variable depending on the amount of tax abatement requested) must accompany each petition in the case of an appeal from DOR.
Can I have someone else represent me in my appeal?
Yes. By filing a Power of Attorney (Form M-2848), you can be represented by a tax practitioner, friend, family member or whomever you choose. Once you have delegated this authority, the person you choose can represent you through correspondence, telephone calls and at any hearing or meeting with the Department.
If, however, you are filing an appeal with the Appellate Tax Board, you either must represent yourself or have an attorney to represent you before the Appellate Tax Board
Is there any way that DOR can reduce my liability by waiving the interest and penalty charges?
DOR does not have the legal power to waive or abate interest due on an unpaid liability. However, if a tax is abated then any interest accrued on the tax will also be abated. A taxpayer may also challenge the calculation and mathematical accuracy of any interest due.
Late-pay penalties are waived on disputed audit assessments for the first 60 days following the date on which the Commissioner gives notice of an assessment and subsequently during any period where an application for abatement is pending.
A request for waiver of a penalty can be considered if you show that failure to file a return or pay a tax in a timely manner was due to reasonable cause and not willful neglect. No involuntary collection of the disputed penalty will occur while the matter is under appeal.
While ignorance of the law is never in itself considered reasonable cause, other factors may permit DOR to waive a penalty. For example, a serious illness or an unavoidable destruction of records may constitute reasonable cause for a late or inaccurate filing. Also, if a taxpayer reasonably relied on erroneous written advice from DOR personnel, DOR will waive any penalty that accrued.
Applying for a penalty waiver has been made simpler for taxpayers. Most waiver requests now can be handled by the Audit Division after an audit is completed. In some cases, depending on where the case is in the Department when the request for a waiver is made, the Collections or Contact Center Bureau may waive penalties.
DOR has developed a set of guidelines on waiving penalties, Administrative Procedure 633, Guidelines for the Waiver and Abatement of Penalties.
Yes. If you wish to further appeal an assessment, the Appellate Tax Board (ATB) will hear virtually all cases that are filed within 60 days after DOR denies a taxpayer's application for an abatement (or within six months of a deemed denial). The ATB holds public hearings on disputed tax cases and is independent of DOR. The ATB has a small claims procedure, a formal procedure and also offers mediation in certain circumstances. Please call the ATB at 617-727-3100 for more information.
Late-pay penalties will continue to be waived for disputed audit assessments and involuntary collection activities will continue to be stayed for all disputed assessments until the matter is resolved by the ATB. If the ATB decides the matter in the Commissioner's favor, an audit-assessed taxpayer will have 30 days after the decision to pay the unpaid liability before late-pay penalties begin, and all taxpayers will have 30 days after the decision before involuntary collection activities will commence on the unpaid liability.
After the ATB rules on a case, either side may appeal the ATB's decision to the Massachusetts Appeals Court. If the taxpayer prevails at the ATB, further appeal by DOR will stop the accrual of late-pay penalties for audit-assessed taxpayers and the imposition of involuntary collection activities on all taxpayers by DOR.
In rare cases, taxpayers may qualify to bypass the ATB and take their cases directly to the Massachusetts Trial Court. To file an appeal with the Trial Court, you first should consult a lawyer familiar with tax law.
DOR's Office of Appeals offers a number of settlement options as easily accessible alternative to the oftentimes-lengthy appeals process. Settlement consideration provides taxpayers and tax practitioners a way to resolve tax cases without expensive and time-consuming litigation, and in a manner that is objective and reasonable to both taxpayers and the Commonwealth.
After a tax has been assessed, you may submit an Appeals Form (Form DR-1) with the Office of Appeals, and request settlement consideration from the office up to the date that the Department denies the taxpayer's abatement. See How Do Tax Appeals Work?
If you request settlement consideration, please remember:
- The settlement function of the Office of Appeals is separate from the formal conference and hearing processes;
- Form DR-1 does not constitute an Application for Abatement and does not extend the time allowed for filing Form ABT or an online abatement application;
- To preserve your appeal rights, you may file for an abatement at the same time you file Form DR-1;
- You must file a petition to the Appellate Tax Board within 60 days of an abatement denial to protect your appeal rights with that body; and
- Authority to settle matters prior to a determination by the Appellate Tax Board rests entirely with the Commissioner of Revenue, and your request for settlement may be rejected by the Commissioner for any reason.
May a tax be forgiven based on my inability to pay?
In some very rare cases, DOR can accept less than the full amount that a taxpayer owes. If there is serious doubt that the tax ever can be collected, taxpayers can submit what is known as an Offer in Final Settlement (Form M-656) to the Department. These requests are handled by the Offers in Final Settlement Unit, which can be reached at 617-887-6400.
A taxpayer should include a payment as a deposit along with the final settlement request. If the request is accepted for review, it will be considered by DOR's executive management staff. In cases where the liability is reduced by more than half or $20,000 or more, the Attorney General of the Commonwealth must review the settlement and has the authority to object to it.
All agreements relating to Offers in Final Settlement that are approved become matters of public record.
What if I think a tax law is unfair and should be changed?
The Courts can overturn a law if it is found to be unconstitutional but, in most cases, laws are changed through the legislative process by the General Court. If you want to propose a change in the Commonwealth's tax laws, you should contact your state senator or representative. As a citizen of the Commonwealth, you have the right to request your legislator to file legislation. Your senator or representative can explain the process to you; he or she can be reached at 617-722-2000 (House of Representatives) or 617-722-1500 (Senate).
How can I find someone to represent me in my appeal?
DOR is ready to assist taxpayers through the appeals process by explaining what steps to take. There also are many well-trained and dedicated tax practitioners in Massachusetts who can guide clients through their dealings with the Department. (The term "tax practitioners" generally refers to tax lawyers, certified public accountants [CPAs], public accountants, accountants and enrolled agents.)
It is a good idea to find a practitioner who is familiar with Massachusetts tax matters since some specialize in federal tax law and administration, which can differ significantly from state practice.
Tax practitioners are listed in the yellow pages under "Accountants," "Lawyers" and "Tax Return Preparation," or you can contact one of the professional associations for a referral. Among the larger statewide organizations are: the Boston Bar Association, the Massachusetts Bar Association, the Massachusetts Society of Certified Public Accountants, the Massachusetts Association of Public Accountants, the Massachusetts Society of Enrolled Agents and the National Society of Enrolled Agents. There are also similar organizations based in many communities and regional areas of the Commonwealth that can be helpful.
Services are available for people with limited incomes as well, and the associations listed above can make an appropriate referral.