Robert R. Bliss
DOR amnesty program for taxpayers with existing business tax liabilities to run from April 1 to June 1; Penalties will be waived if taxes are paid in full by June 1 for the period(s) assessed
The Massachusetts Department of Revenue has released the details of a two-month amnesty campaign (April 1 to June 1) designed to benefit taxpayers with existing business tax liabilities who have previously received notice from DOR of an outstanding tax liability. Governor Patrick proposed the amnesty measure last year and it was approved by the Legislature in November with the passage of Section 43 of Chapter 166 of the Acts of 2009.
Those taxpayers who take advantage of the amnesty period will not have to pay unpaid penalties and the interest directly attributable to those penalties. However, they will have to pay interest on the unpaid tax. The special business tax amnesty program will apply to tax years or periods ending on or before December 31, 2009.
The amnesty covers a variety of business or trustee tax types, with the most significant dollars owed in sales and use tax ($165.4 million), meals tax ($93.4 million) and withholding tax ($126.2 million). The total tax owed in the amnesty bills to be issued is $408.8 million, but if all taxpayers were to pay during amnesty, the amount owed (minus penalties) would amount to $304.3 million.
"As we did for income taxpayers last year, the Commonwealth is offering a unique opportunity for taxpayers with an existing business tax liability incurred before Dec. 31, 2009, to pay the tax owed without having to pay hundreds of thousands of dollars in penalties," said DOR Commissioner Navjeet K. Bal. "In this tough economy, this is a win for the taxpayers who receive amnesty bills, and for the Commonwealth which benefits by accelerating tax revenues and reducing the need for ongoing collection efforts associated with these delinquencies," she said.
The average dollar amount of penalties to be waived during the amnesty is about $3,000. DOR has estimated the amnesty plan could generate about $20 million in tax collections in FY10 from businesses who can avail themselves of this limited opportunity.
Only taxpayers who receive the special amnesty tax bills starting April 1 will be eligible for the amnesty program. The amnesty will run until June 1. Individual income taxpayers are not eligible to participate; this amnesty is only for business tax liabilities, and, specifically for those who receive amnesty tax bills.
The amnesty will not extend to any business taxpayer that the Commissioner determines, prior to the start of the amnesty, was the subject of a tax-related criminal investigation or prosecution. The amnesty also will not extend to taxpayers who have signed a settlement agreement with the Commissioner, or to taxpayers who have paid all tax and interest due relating to an outstanding assessment, but, at the start of the amnesty period, still owe or are properly disputing penalties from that assessment. However, taxpayers who have entered into a payment agreement prior to the start of the amnesty period are eligible to participate, as are taxpayers who have appeals pending.
The amnesty will provide the opportunity to pay back taxes without having to pay penalties that may account for 20 percent or more of an unpaid tax bill. The bills will be mailed to an estimated 36,000 taxpayers. If an eligible taxpayer fails to pay the full outstanding balance of tax and interest, the Commissioner may impose an additional penalty, not to exceed $500.
During the amnesty period DOR will waive all unpaid penalties previously assessed if full payment of back taxes and any interest due is made in response to amnesty tax bills. These bills will show the individual period balance, amount of unpaid penalty waived if the amnesty balance is paid in full by the due date, and the amnesty amount due. Until the amnesty balance is paid in full, DOR collection actions which include the authority to lien, levy and seize assets and suspend licenses will continue on a taxpayer's account. Any payments received after the June 1 deadline will not receive the Amnesty Waiver.
The easiest way to pay the amnesty notice is online through DOR's Web Services for Income application or the Web File for Business Application at www.mass.gov/dor. Online payments may be made electronically using a credit card, but a convenience fee will be charged by the selected credit card vendor. When making an online payment, taxpayers should make sure to enter the "bill number" listed in the upper right hand corner of the amnesty notice or, if paying by check through the mail, taxpayers must complete and attach the coupon from their Amnesty Tax Notice.
Taxpayers with questions should visit www.mass.gov/dor for more information about the amnesty program or call 617-887-6367 or toll-free in Massachusetts 1-800-392-6089. Participation in the amnesty program and payment of the tax and interest does not constitute a forfeiture of statutory rights or appeal or an admission of liability for the assessment.
Commissioner Bal urged businesses and individuals that have outstanding tax obligations but are not eligible for the amnesty, and who may be facing economic hardship, to contact the Department at the earliest possible time. "In many cases, we can work with the taxpayer to set up a payment agreement that takes into account how much they owe and how much they can realistically pay on a monthly basis to address their tax obligations," Bal said.
For more information on the Department's programs for taxpayers facing payment and other financial problems, please go to Programs and Services under the For Individuals and Families or For Businesses tab at www.mass.gov/dor.
DOR's Technical Information Release on the amnesty program is attached at http://tinyurl.com/y9pdrfy.
Frequently Asked Questions are at http://tinyurl.com/yeoao99.