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Administrative Procedure

Administrative Procedure AP 631: The Collection Process

Date: 01/31/2018
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Administrative

GENERAL PROVISIONS

            The Department of Revenue's Collections Bureau is responsible for collecting delinquent taxes owed the Commonwealth. In general, a taxpayer's account will be transferred to the Collections Bureau if delinquent taxes are not paid or disputed after the due date on the demand for payment notice. See AP 610.

 

            When an account has been transferred to Collections, a “Notice of Collection” or a “Final Notice” will be issued showing the amount of the tax owed and indicating the date by which full payment must be made. The collector to whom the account has been assigned will, in most cases, attempt to reach the taxpayer to discuss the status of the account. If the collector cannot reach the taxpayer, or if the taxpayer does not respond to this notice, the collector will use various enforcement actions to assure that delinquent taxes due the Commonwealth are paid. The taxpayer will also be subject to refund intercepts and offsets.

 

            See TIR 99-18 for discussion of suspension of involuntary collection activities under G.L. c. 62C, § 32(e) while the taxpayer disputes a tax amount (or any portion thereof) administratively within DOR or before the Appellate Tax Board or Probate Court.

631.1. Tax Lien

            To protect the Commonwealth's interests, the collector will file a "Notice of Massachusetts Tax Lien." The tax lien attaches to all of the taxpayer's real and personal property and may prevent the sale or transfer of the property attached. Because the notice is a public record, it may also damage the taxpayer's credit record.

 

            A “Notice of Massachusetts Tax Lien” is recorded at the Secretary of State's Office in Boston and at the Registry of Deeds of the county in which the taxpayer resides and/or where any real property is situated. When the “Notice of Tax Lien” is filed, the taxpayer will be notified in writing of the amount of the lien and the places it has been recorded.

 

            The “Notice of Massachusetts Tax Lien” indicates the tax type, the assessment date and the amount owed, including any statutory additions to tax, i.e., accrued interest and penalties. The amount owed is current as of the date of the lien notice. In general, interest and applicable penalties will continue to accrue until the tax liability, whether disputed or not, is paid in full.

 

            Effective January 1, 2005, tax liens will remain in effect for 10 years from the date of assessment or for a longer period if permitted by I.R.C. § 6322.

631.1.1. Full Release of Lien

            A taxpayer that wants to obtain a full release of a lien must pay the amount shown on the lien plus any additional interest and penalties accrued to the date of payment. If the taxpayer wants an immediate release of the lien, payment must be made by bank check, personal money order, certified check or attorney's Client Fund check. If payment is made with a personal check, the lien will ordinarily not be released until 30 days after the date the payment is credited to the taxpayer's DOR account. If the taxpayer requests an earlier release, a copy of the cancelled check must accompany the request. This delay is necessary to assure that the check has been honored.

 

            Once payment has been received, the Department of Revenue will make every effort to release tax liens by notifying the agencies where they have been recorded. If the taxpayer finds that the lien has not been released, he or she may request a release by contacting:

 

Chief, Collections Bureau

Massachusetts Department of Revenue

P.O. Box 7021

Boston, MA 02204

 

For further information, call (617) 887-6400.

 

            The Department of Revenue will record all releases of Massachusetts tax liens unless written instructions to the contrary from the taxpayer are received by the Collections Bureau Chief.

631.1.2. Partial Release of Lien and Subordination of Lien

            A taxpayer may find that he or she can pay a tax in full or in part only if the Department either partially releases a lien or allows another lien holder to have priority

 

over DOR's lien. See 830 CMR 62C.50.1 for rules describing when DOR may issue a partial release of its lien or may subordinate its lien.

 

            To obtain either a partial release of lien or a subordination of the lien, a taxpayer must submit a written request to:

 

Chief, Collections Bureau

Massachusetts Department of Revenue

P.O. Box 7021

Boston, MA 02204

 

The following information should be included:

  • a description of all real property subject to the lien with correct title reference and location;
  • a description of all personal property subject to the lien including the name of manufacturer, model number, and the name of the office in which any encumbrances on the property are recorded;
  • the address and full legal description of any real or personal property sought to be released;
  • a complete explanation of the request for the release and a payment proposal detailing the amount of money being offered in exchange for it;
  • a statement of all encumbrances on the property including the property to be released and the date the encumbrances were recorded; and
  • a copy of the “Notice of Massachusetts Tax Lien”.

 

            In considering an application for partial release of lien, the Commissioner may require further evidence or documentation, such as a supporting appraisal of the property, the Closing Disclosure, Settlement Statement, or its equivalent, indicating how the funds are being distributed if a property is being sold or refinanced, etc.

631.1.3. Waiver of Corporate Tax Lien

See AP 613.2, Waiver of Corporate Tax Lien.

631.2. Tax Levy

            A collector may also levy upon a taxpayer's property. The most common levies are made against a taxpayer's wages or bank accounts by serving the levy on the holder of the property, but a levy may be made against any property or rights to property belonging to a taxpayer, whether real or personal, tangible or intangible, and may include a seizure of the property itself.

 

            There are two types of levies served on holders of the taxpayer's property. The first type, the “Notice of Levy on Wages, Salary and Other Income” allows DOR to take a certain amount of a taxpayer's wages, salary or other income as payment of a tax liability. This levy remains in effect until the liability is paid in full. The second type, the “Notice of Levy”, is a 60-day levy that allows DOR to take possession of the taxpayer's property or rights to property. It remains in effect for 60 days from the date it is first served or until the liability is paid in full or released, whichever first occurs or becomes unenforceable by reason of lapse of time.

 

            See 830 CMR 62C.55A.1 for exemptions to both the continuous and the 60 day levy.

631.2.1. Seizure

            There are instances when DOR employees levy against the real or personal property of the taxpayer by taking direct possession of it, i.e., by seizure. Before the seizure DOR will generally send the taxpayer a “Notice of Intent to Seize” and allow ten days for the taxpayer to respond by paying the liability or making other arrangements satisfactory to DOR. If the property to be seized is located on private property, DOR will obtain a “Writ of Entry” from a court before seizure. At the time of seizure, DOR employees will take an inventory of all property seized, secure the assets and post the property with a “Notice of Seizure”. Neither the owner nor the public may gain access to the seized property.

631.2.2. Release of Seized Assets

            Once assets are seized they can only be released if the taxpayer pays DOR the liability in full by bank check, postal money order, certified check or cash, or if the taxpayer enters into a payment agreement with DOR. The taxpayer must also reimburse the Commonwealth for any expenses incurred in connection with the seizure.

631.2.3. Sale of Seized Assets

            If the taxpayer fails to pay the liability after the property has been seized, the assets will be sold. Assets are sold through public auction or at a sealed bid sale depending upon the type and quantity of property DOR holds. If goods are perishable or likely to decrease greatly in value if they are kept, DOR will appraise the property and, if the owner can be easily found, notify him of the appraisal. The owner may then redeem the property at the appraised price within the time specified in the notice. If the appraised price is not paid, the sale is held as soon as possible.

 

            In most cases, DOR will notify the taxpayer that it intends to sell the seized assets. The notice will specify the property to be sold and the time, place, manner and conditions of the sale. Public notice of the sale will be posted at a city or town hall near the place of seizure or in a newspaper published or circulated within the county where the seizure occurred. The sale will generally be held no fewer than 10 days nor more than 40 days after the date of public notice.

 

            A taxpayer may redeem property at any time prior to sale by paying the full amount owed which includes all expenses incurred while preparing for the sale. Real property may be redeemed up to 180 days after the sale has taken place.

631.2.4. Levy in Excess of Liability

            Levies are often served on more than one person holding a taxpayer's assets. This may result in collections in excess of the amount the taxpayer owes. Excess collections may also result from the sale of a taxpayer's assets at a price in excess of his liability. Generally, where the amount of money received by the Department from the sale or levy of a taxpayer's property is in excess of the liability, the surplus will be returned to the taxpayer. However, in those cases where the Department is aware of other claims to the taxpayer's property, the Department may deliver the surplus to the court to allow interpleader proceedings.

631.2.5. Release of Property to Senior Creditors

            If a taxpayer's debt to any creditor is senior to or has priority over the debt to the Commonwealth, the creditor may request that DOR surrender the seized property. The creditor must produce the following to substantiate the claim:

 

  • the promissory note or mortgage showing the taxpayer's debt;
  • the financing or Uniform Commercial Code (“UCC”) statement in the creditor's favor, reflecting the filing and recording date;
  • the notice of default sent to the taxpayer; and
  • a statement of balance due or an accounting of the taxpayer's indebtedness.

 

            DOR's Seizure Unit will examine these documents before any property is released. Send documentation along with a letter of explanation to the Seizure Unit at:

 

Department of Revenue

Collections Bureau

Seizure Unit

P.O. Box 7021

Boston, MA 02204

 

For further information, call (617) 887-6400

 

            Where property is equal in value or less than the amount of the senior lien, DOR will usually release the property to the senior lien holder. Where the property is worth more than the senior lien, DOR may choose to sell the encumbered property, subject to any and all encumbrances.

 

631.3. Payment Agreements and Hardship

            In some situations, taxpayers are unable to pay their full tax liability upon demand from the Collections Bureau and are unable to borrow the full amount in order to do so.

631.3.1. Applications

            Before a payment agreement or hardship will be considered, the taxpayer must file all outstanding returns. Taxpayers should also know that a payment agreement extends the statute of limitations for the term of the payment agreement. In addition, penalties and interest continue to accrue on the balance until the liability is paid in full. Taxpayers with payment agreements or an approved hardship must also file any additional returns and pay in full any additional taxes that may come due during the term of the payment agreement.

 

Before a payment agreement or hardship is approved there must be sufficient documentation justifying need. The following are required:

  • if there is no recent financial statement, either Form M-433(I) for individuals or Form M-433(B) for businesses;
  • copies of last‑filed individual Federal income tax returns and business tax returns, if applicable (If the taxpayer is a business taxpayer, copies of individual federal income tax returns for any responsible person.);
  • copies of paystubs;
  • the name and account number of all personal or business accounts with any bank or other financial institution and credit card accounts and copies of the three most recent account statements; and
  • corporate taxpayers must include a “Certificate of Corporate Vote” authorizing responsible persons to enter into the payment agreement.

            A payment agreement or hardship will be recommended, based on the individual facts and circumstances. Once the payment agreement is approved by DOR, the taxpayer will be required to sign a Payment Agreement (either a paper or electronic version). The Payment Agreement will specify the amount and due dates of installment payments. A down payment is usually required for a payment agreement. Unless a taxpayer establishes a lien waiver agreement, the taxpayer will be subject to a lien. The taxpayer will also be subject to refund intercepts and offsets.

631.3.2. Default

            If a taxpayer under a payment agreement misses a payment, he or she will receive a default “Notice of Intent to Cancel Payment Agreement”. If the missed installment is not paid promptly, the payment agreement contract will be cancelled. The taxpayer must then pay the balance in full or be subject to levy and seizure. If the taxpayer fails to file current returns and pay current taxes as they become due, the taxpayer will receive a “Notice of Intent to Cancel Payment Agreement” and must immediately file required returns and pay any delinquent amounts to avoid cancellation of the payment agreement. For more information, contact:

 

Collections Bureau

Massachusetts Department of Revenue

P.O. Box 7021

Boston, MA 02204

 

For further information, call (617) 887-6400

 

See TIR 99-18 for discussion of suspension of involuntary collection activities under G.L. c. 62C, § 32(e) while the taxpayer disputes a tax amount (or any portion thereof) administratively within DOR or before the Appellate Tax Board or Probate Court.

631.4. Public Disclosure

 A Notice of Intent to Disclose Liability may be sent to a taxpayer who owes twenty-five thousand dollars or more and has been delinquent for a period of six months from the date the taxes were assessed. If the taxpayer fails to resolve the liability within 90 days of the notice, the name, city or town, and liability amount of the taxpayer shall be posted on the Department’s public website.

AP 631.4 may not apply if the liability or other tax-related non-compliance is subject to certain provisions of G.L. c. 62C, §§ 32, 47A, 47B or 49A that allow a taxpayer to dispute the tax, or any portion thereof, administratively within DOR or before the Appellate Tax Board or the Probate Court.

631.5. Licenses and Certificates of Authority: Suspension and Revocation

            In order to operate certain businesses or carry on certain trades and professions in Massachusetts, a license or certificate of authority is required. Licenses must be obtained from the Commonwealth agency or subdivision responsible for issuing the license. "Agency" is any department, board, commission, division or other agency of the Commonwealth or its subdivisions. "Subdivision" includes any county, city, town, district or other political subdivision of the Commonwealth.

631.5.1. Good Tax Standing Requirement

When requesting a license or certificate of authority, a person or business must certify to the issuing agency or subdivision that it has complied with Massachusetts tax laws. No license may be issued without this certification. The DOR will issue a document called a “Certificate of Good Standing” that states that a taxpayer has paid all taxes through the date of issuance. A taxpayer may apply for this document online.

631.5.2. DOR's Authority to Request Suspension or Revocation

            By February 1st of each year, every licensing agency or subdivision provides the Department of Revenue with a list of all licenses that have been issued, renewed or extended during the previous year. DOR has the authority to request that the agency or subdivision suspend, nonrenew or revoke the license or certificate of any licensee who has failed to file a required return or pay taxes due and has not filed in good faith an application for abatement or petition contesting the tax before the Appellate Tax Board.

631.5.3. Notice of Delinquency to Licensee

            If DOR determines that the licensee is not in compliance, it will send a “Notice of Intent to Suspend/Nonrenew/Revoke License”. The Notice will contain information about the tax delinquency and/or non-compliance. The licensee must respond within 30 days from the date of this notice by either filing the required return and/or paying the tax due or by otherwise demonstrating compliance with the tax laws of the Commonwealth.

631.5.4. Notice to Licensing Agency

            If the licensee fails to demonstrate their tax compliance within 30 days, DOR will send a “Notice of Delinquency” to both the licensee and the licensing agency or subdivision. The notice states that DOR will request that the agency or subdivision revoke, nonrenew or suspend the business or professional license.

 

            It is illegal for any business, trade or profession to operate with a revoked, nonrenewed or suspended license. The licensing agency or subdivision may pursue violators through fines or court action.

631.5.5. Notice of Compliance

            A license will not be reinstated until the issuing agency has received a memo from the MDOR Certificate Unit verifying a licensee’s tax compliance. To obtain a professional license renewal via the Department’s online services, visit the Department’s website. At the application type, there is a drop down arrow and select Professional License Renewal.

631.5.6. Driver’s License Suspension

 The Department of Revenue has the authority to suspend a driver’s license and automobile registration for non-payment of taxes. Taxpayers may be sent a “Notice of Intent to Suspend Driver’s License/Vehicle Registration” for non-payment. If the liability is not resolved within 30 days of the notice, the Taxpayer’s license and registration will be marked by DOR at the Registry of Motor Vehicles (RMV). The RMV will suspend the license and registration 10 days after they are marked.

631.5.7. Appealing Suspension or Revocation

            A license that has been suspended, nonrenewed or revoked at the request of DOR is generally subject to only the appeal provisions found in G.L. c. 62C, §§ 47A, 47B and 49A.

 

For more information call or write:

 

Collections Bureau

Massachusetts Department of Revenue

P.O. Box 7021

Boston, MA 02204

 

For further information, call (617) 887-6400

631.6. Collection Agencies

            The Department of Revenue is authorized by G.L. c. 14, § 3A to employ private collection agencies for the collection of delinquent taxes. The commissioner shall not assign the account of any taxpayer to a private collection agency until such taxpayer has been notified. A collection agency employed by DOR does not have lien or levy powers but will use the same collection techniques used in the regular course of its business. See TIR 99-18 for discussion of suspension of involuntary collection activities under G.L. c. 62C, § 32(e) while the taxpayer disputes a tax amount, or any portion thereof, administratively within DOR or before the Appellate Tax Board or the Probate Court.

631.7. Remedies of DOR

            The Department of Revenue is authorized by G.L. c. 62C, § 47 to recover any unpaid taxes in an action in contract brought in the name of the Commonwealth.

Reference for 631.1

G.L. c. 62C, §§ 32(e), 50, 51, 52

I.R.C. § 6322

830 CMR 62C.50.1

TIR 99-18

AP 610, Bills and Demands for Payment

AP 613, Requesting a Certificate of Tax Compliance

Notice of Massachusetts Tax Lien

Release of Massachusetts Tax Lien

Payment Agreement

Settlement Statement

 

Reference for 631.2

G.L. c. 62C, §§ 32(e), 53, 54, 55, 55A, 56, 57, 58, 60, 61, 62, 63, 64

830 CMR 62C.55A.1

830 CMR 62C.64.1

TIR 99-18

Notice of Levy

Release of Levy

Notice of Levy on Wages, Salary and Other Income

Releases of Levy on Wages (Salary and Other Income)

 

Reference for 631.3

G.L. c. 62C, § 32(e)

TIR 99-18

Form M-433(B)

Form M-433(I)

Payment Agreement

 

Reference for 631.5

G.L. c. 62C, §§ 32, 47A(a), 47B, 49A

830 CMR 62C.47A.1

830 CMR 62C.47A.2

TIR 99-18

TIR 08-8

 

Reference for 631.6

G.L. c. 14, § 3A

G.L. c. 62C, § 32(e)

TIR 99-18

 

Reference for 631.6​​​​​​7

G.L. c. 62C, § 47

Referenced Sources:

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