Administrative Procedure  AP 620: Reporting Changes in Tax Due to Another United States or Canadian Jurisdiction

Date:	01/24/2024
Organization:	Massachusetts Department of Revenue
Referenced Sources:	Massachusetts General Laws

620.1. In General

If another United States state or Canada or a Canadian province makes a final determination that establishes that a personal income taxpayer’s tax owed to that jurisdiction is different than the tax previously paid, when such tax was the basis for a credit claimed under G.L. c. 62, § 6(a), the taxpayer must inform the Department of Revenue (DOR) of that change by filing an amended return.  A determination is final if there is no right of administrative or judicial appeal.  See 830 CMR 62C.30A.1(2) for more information on final determinations.

620.2. Reporting Changes in Income Tax Resulting from Another Jurisdiction’s Final Determination

If another jurisdiction decreases the tax due from any individual when that jurisdiction’s tax was the basis for a credit claimed in Massachusetts, the taxpayer must report the change and pay any additional tax due with interest within one year from the date of the final state determination. Changes in tax due to Massachusetts as a result of another state’s change are reported to Massachusetts on an amended return. A copy of the other jurisdiction’s agreement, document or other report and any other relevant documentation must be attached.

If the other jurisdiction makes a final determination that the taxpayer’s tax owed to that jurisdiction is more than the tax previously paid, and the final determination affects the taxpayer’s ability to claim a credit under G.L. c. 62, § 6(a), the taxpayer may submit an amended return to increase the Massachusetts credit claimed limited to the amount of the change. A copy of the other jurisdiction’s agreement, document or other report and any other relevant documentation must be attached. See 830 CMR 62C.26.2 and AP 605.

620.3. Process for Amending Tax Returns

Personal income taxpayers are encouraged to file amended returns electronically if the return is prepared through third-party software and e-file is available. Taxpayers filing amended returns on paper will manually complete the same tax form as used for the original or prior amended return, whichever was filed later, and check the box indicating the return is an amended return relating to a federal change (there is no specific box for state change at this time).

Please note: the amended return must include all forms and schedules included with the return to be processed correctly. Do not include any additional documents, like a copy of the original return or an application for abatement. If the amended return incorporates changes that are the result of an audit, please include a complete copy of the other jurisdiction’s audit report and supporting schedules.

Taxpayers must pay any tax due on an amended return at the time of filing or they will be subject to applicable interest and penalties. Certain payment may be subject to electronic payment requirements. See TIR 16-9. Interest of any refunds will be subject to the provisions of G.L. c. 62C, § 40.

620.4. Additional Assessment by DOR

If DOR determines from a taxpayer's report of change in tax due to another jurisdiction that the correct Massachusetts tax was not fully assessed, it will assess the additional tax with interest. DOR may assess the additional tax within one year of receipt of the taxpayer's report, regardless of the assessment limitations of G.L. c. 62C, § 26. If the taxpayer does not report the change to DOR, DOR will have two years from receipt of information from the other jurisdiction in which to assess the additional tax, or within the assessment time limitations of G.L. c. 62C, § 26, whichever is later. The taxpayer will also be subject to a penalty as described below in 620.6. An assessment with respect to a state change is limited to changes in a taxpayer's tax liability resulting from the change in tax due to another jurisdiction.

620.5. Refunds and Abatements

If a taxpayer believes that an increase in tax due to another jurisdiction increases the credit the taxpayer could claim under G.L. c. 62, § 6(a), the taxpayer may submit an amended return.  The taxpayer may request a refund, within one year of the final determination from the other jurisdiction, or within the limitations of G.L. c. 62C, § 37, whichever is later.  A refund sought under G.L. c. 62C, § 37 is also subject to the limitations in G.L. c. 62C, § 36. Any reduction in Massachusetts tax sought under G.L. c. 62C, § 30A, the state change statute, are limited to changes directly attributable to changes in the other jurisdiction’s final determination.

If DOR has assessed an additional tax as a result of a taxpayer's report of changed tax due to another jurisdiction, and the taxpayer disagrees with the DOR assessment, the taxpayer may submit a dispute with the Office of Appeals. The simplest and most direct method to submit a dispute is electronically through MassTaxConnect. A taxpayer who does not have access to MTC may complete and mail a paper Form ABT, Application for Abatement.The dispute must be submitted within three years of the filing date of the original return, two years of the date of assessment, or within one year of the date of payment, whichever is later. See 830 CMR 62C.37.1 and AP 627, Applications for Abatement, for more information on disputing a DOR assessment.

620.6. Offsets

A taxpayer that owes additional tax to Massachusetts as a result of a change in tax owed to another jurisdiction, and that is submitting an amended return to report such changes, may request that the additional tax be offset, or reduced, based on issues for the same tax type and tax year that are unrelated to the state change.  The taxpayer should report the changes on the amended return and attach an explanation justifying the offset to the report of state change. The taxpayer may request an offset within one year of the final state determination, or within the limitations of G.L. c. 62C, § 37, whichever is later. A refund sought under G.L. c. 62C, § 37 is also subject to the limitations in G.L. c. 62C, § 36. The Commissioner will determine the taxpayer’s balance due, taking the taxpayer’s offset request into consideration.

If DOR has assessed an additional tax as a result of a taxpayer's report of changed tax due to another jurisdiction, the taxpayer may request that the additional tax be offset, or reduced, based on issues for the same tax type and tax year that are unrelated to the state change by filing an amended return within three years of the filing date of the original return, two years of the date of assessment, or within one year of the date of payment, whichever is later. See 830 CMR 62C.26.2. The taxpayer should attach an explanation justifying the offset with the amended return.

If a taxpayer has requested a reduction in Massachusetts tax as a result of a state change, the Commissioner may offset the amount of abatement requested with any additional tax due, whether or not the additional tax is based on issues related to the change. However, the additional tax due may not exceed the amount of the reduction in tax under G.L. c. 62C, § 30A.

620.7. Penalty for Failure to Report and Pay

Failure to report a decrease in tax owed to another jurisdiction that affects the credit claimed under G.L. c. 62, § 6(a) and failure to pay any additional tax within the time limits described above will result in additional interest and penalties, including a penalty of 10% of the additional tax found due. See TIR 10-11.

For general information on state changes, call DOR at (617) 887-MDOR or toll-free within Massachusetts at 1 [phone].  For specific information on changes in taxes due to another jurisdiction that may affect the credit that was or may be claimed under G.L. c. 62, § 6(a), contact the Personal Income Tax Bureau at [phone].

 

REFERENCES:
G.L. c. 62, § 6(a)
G.L. c. 62C, §§ 26, 30A, 32(e), 33(c), 37, 40.
830 CMR 62C.26.2
830 CMR 62C.30A.1(2)
830 CMR 62C.33.1
830 CMR 62C.37.1
TIR 99-18
TIR 10-11
TIR 16-9
TIR 16-11
TIR 16-13
DD 17-3
AP 627: Applications for Abatement