Arithmetic or Clerical Assessment

In the case of an obvious mathematical or clerical error, or any other error apparent on the face of the return, DOR may assess the amount of additional tax attributable to such error without giving notice of its intention to assess. Generally, DOR will issue a Notice of Change to Your Tax Return.

Examples of such errors include, but are not limited to:

  • an error in addition, subtraction, multiplication or division on a return;
  • an obviously incorrect use of a DOR or IRS table; and
  • an entry on a deduction or credit line that exceeds the statutory limit.

DOR is not required to provide a taxpayer with a Notice of Intention to Assess a tax. It may notify a taxpayer of the erroneous or missing information before it makes a deficiency assessment for an arithmetic or clerical error. In any event, DOR will issue a written notice of deficiency assessment to a taxpayer.

For correction of return assessment based on third party information
Effective for Returns Filed on or after July 1, 2003, DOR may correct returns based on information from third party sources (generally, unreported income including, but not limited to, reports of taxable unemployment compensation or Massachusetts state lottery winnings,) and assess a deficiency attributable to such omission without giving prior notice to the taxpayer. In such cases, DOR is required to send only one notice. This correction may result in an increase in the amount of tax due or in the reduction of a refund claimed by the taxpayer. DOR will notify the taxpayer of the change and the reason for the change by way of a "Notice of Change to Your Tax Return."

If the taxpayer fails to challenge the change explained in this Notice in writing within thirty (30) days from the date appearing on the Notice, or within any extended period permitted by the Department, the corrected assessment will become final with no further action required on the part of the Department or the taxpayer.

Hearing for Correction of Return Based on Third Party Information:
If the taxpayer disagrees with the proposed correction, see Hearing before Corrrection of Return Assessment Based on Third Party Information


Audit Assessment

DOR may examine or audit a taxpayer's books, papers or other records to verify a taxpayer's tax liability. If it determines from the verification of a return that the full amount of any tax has not been assessed, it may assess an additional tax due with interest, at any time within three years of the date the return was due or was actually filed, whichever is later.

Before making a deficiency assessment, DOR must give notice of its intent to do so by sending the taxpayer a written Notice of Intention to Assess (NIA). The NIA informs a taxpayer that he or she has 30 days thereafter to request a conference with DOR. After the expiration of 30 days from the date of such notification, DOR shall assess the amount of tax due the Commonwealth

A properly mailed NIA will be presumed to have been received by the taxpayer. Failure to receive the notice will not impact the validity of the tax.

Hearing: 
If the taxpayer disagrees with the proposed assessment, see Hearing before Assessment .


False or Fraudulent Return / Nonfiler Assessment

DOR may determine the tax due according to its best information and belief, and assess such tax Late file and Late Pay Penalties without giving notice of his intention to assess for any taxable period for which a return was due in the case of:

  • a false or fraudulent return filed with intent to evade a tax; or
  • a failure to file a return.

Before making a deficiency assessment, DOR will generally give notice of its intent to do so by sending the taxpayer a written Notice of Intention to Assess (NIA). The NIA informs the taxpayer that he or she has 30 days thereafter to request a conference with DOR. After the expiration of 30 days from the date of such notification, DOR shall assess the amount of tax due the Commonwealth.

A properly mailed NIA will be presumed to have been received by the taxpayer. Failure to receive the notice will not impact the validity of the tax.

Hearing:
If the taxpayer disagrees with the proposed assessment, see Hearing before Assessment .

Double Penalty:
DOR may determine the tax due, according to his best information and belief, and may assess the same up to double the amount determined to be due in addition to other penalties if:

  • a taxpayer who has been notified by the commissioner that he has failed to file a return or has filed an incorrect or insufficient return refuses or neglects within thirty days (30) after the date of such notification to file a proper return; or
  • if a person has filed a false or fraudulent return or has filed a return with a willful attempt to defeat or evade the tax.

Abatement Limitation: The Commissioner shall not abate the tax below double the amount for which the person assessed, who has filed a fraudulent, incorrect or insufficient return, was properly taxed. Therefore, DOR will hold the proper tax as shown on the return or determined to be proper on verification of the return, less any withholding, timely estimates or extension payments, at double unless reasonable cause exists. See AP 633  

Limitations Periods for Taxpayers Failing to File Tax Return for Tax Years Beginning January 31, 2011: 

Seven Year (Eight-Four Month) Look Back Period for Assessing:
Generally, when the Commissioner determines that a taxpayer has failed to file tax returns which were required, the Commissioner may assess the taxpayer with respect to returns due during the most recent seven years. The seven-year look-back period will commence with the final day of the most recent taxable period for which the taxpayer was required to file a return. The look-back period is determined (without regard to extensions) as of the date the Commissioner first contacted the taxpayer in writing concerning such tax.

If an individual taxpayer or corporation voluntarily files some or all of its overdue returns without first being contacted by the Commissioner, the look-back period is determined as of the date the taxpayer filed one or more returns with the Commissioner.

Note: Nonresident individual taxpayers, foreign corporations and other entities that voluntarily disclose a past due filing obligation may qualify for the three-year look-back policy explained below.

Three-Year (Thirty-Six Month) Look-back Period for Voluntary Disclosure:
To encourage voluntary compliance, the Department limits assessments to the three most recent tax years in cases where nonresident individual taxpayers and foreign corporations or other foreign entities voluntarily disclose their non-filing. A nonresident individual taxpayer making a voluntary disclosure is not conceding that the taxpayer has unreported Massachusetts source income. Similarly, a foreign corporation taxpayer that makes a voluntary disclosure is not conceding that it has acquired nexus with Massachusetts. As with the seven-year look-back policy, this three-year look-back period will commence with the final day of the most recent taxable period for which the taxpayer was required to file a return, as determined (without regard to extensions) as of the date the taxpayer or its representative first contacts the Department in writing, whether anonymously or not. The Commissioner will assess the taxpayer for the tax type in question for all taxable periods ending during the three-year period described.

Procedures for Voluntary Disclosures:
Nonresident individual taxpayers who may have unreported Massachusetts source income and foreign corporations and other nonfiler entities which may have acquired nexus with Massachusetts can voluntarily disclose their nonfiling of tax returns by contacting the Department's Voluntary Disclosure Unit. The initial contact on most voluntary disclosures is a letter from the taxpayer's representative giving a brief general description of the anonymous taxpayer's activities and what benefit the taxpayer is seeking by coming forward. The Department will typically respond with a letter outlining the Department's position. At that time, the taxpayer can decide whether or not to disclose voluntarily its non-filing. The Voluntary Disclosure Unit can be contacted either in writing or by phone as follows:

Massachusetts Department of Revenue
Voluntary Disclosure Unit
200 Arlington Street, Room 4300
Chelsea, MA 02150

Phone: 617-887-6725
Fax: 617-887-6792

For examples and exceptions, see TIR 11-1


Jeopardy Assessment

If DOR believes that the facts and circumstances of a case indicate that the collection of a tax will be jeopardized by delay, it will, whether or not the time otherwise prescribed by law for filing a return and paying such tax has expired, immediately assess the tax plus any penalties and interest, (including Section 28 penalties) based on DOR's best information and belief.

DOR Is not Required to Provide Taxpayer with a Notice of Intention to Assess Tax:
DOR will send a written notice of the jeopardy assessment to the taxpayer and will make an immediate demand for full payment of the jeopardy assessment. If the taxpayer neglects or refuses to pay the amount of a jeopardy assessment, DOR may pursue any and all available remedies to collect the full amount of the jeopardy assessment.

Examples of such circumstances include, but are not limited to:

  • a taxpayer is arrested with substantial, apparently unreported income;
  • a taxpayer appears ready to leave Massachusetts or go into hiding immediately;
  • a taxpayer appears ready to place his or her property beyond the reach of Massachusetts by concealing it, moving it out-of-state, or transferring it to some other person or entity.

Documentation to Submit with Abatement/Amended Tax Return:

Arithmetic or Clerical Assessment

  • Explanation of your position, including any relevant court decisions or statute cites.

For correction of return assessment based on third party information

Audit Assessment

If you disagree with DOR's interpretation of law 

  • Explanation of your position, including any relevant court decisions or statute cites.

If you have additional documentation not submitted at the audit level

  • Any documents to dispute DOR audit findings.

False or Fraudulent Return / Nonfiler Assessment 

For personal income, if you believe that you are not required to file a return

  • Copy of Form 1040, U.S. Individual Income Tax Return;
  • Any other documentation to support your claim that no return is due.

For personal income, if you are required to file a return

  • Explanation for not timely filing a return and for not timely responding to DOR's Notice of Failure to File or proof that you did respond to the NFF;
  • Documentation to support discrepancy between the tax amount on the original Massachusetts return differs from DOR's assessed amount (not including any double penalty);
  • Original signed Massachusetts Form 1 or 1NR/PY;
  • Copy of Form 1040, U.S. Individual Income Tax Return.

For corporate excise, if the corporation believes that it is not required to file a return

  • Completed DOR Corporate Nexus Questionnaire.
  • Explanation for not timely filing a return and for not timely responding to DOR's Notice of Failure to File or proof that the corporation did respond to the NFF;
  • If the tax amount on the original Mass return differs from DOR's assessed amount (not including any double penalty), documentation to support discrepancy;
  • Original signed Massachusetts corporate return(s);
  • Copy of federal corporate returns.

For trustee taxes, if the business is not required to file a return

  • Clear explanation and substantiating documentation.

For trustee, if the business is required to file a return

  • Explanation for not timely filing a return and for not timely responding to DOR's Notice of Failure to File or proof that the business did respond to the NFF;
  • Original signed tax return(s); and
  • Documentation to support discrepancy if the tax amount on the original return differs from DOR's assessed amount (not including any double penalty).

Massachusetts References:

Arithmetic or Clerical Assessment 

Audit Assessment 

False or Fraudulent Return / Nonfiler Assessment

Jeopardy Assessment 

  • M.G.L. Chapter 62C, Section 29