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Directive Directive 89-21: Nonresident Employed on Fishing Vessel; Nonresident Seamen Employed in Foreign or Coastwise Trade, etc.; Withholding

Date: 12/11/1989
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax

FACTS: Ethel, who is not a resident of Massachusetts, works on a fishing vessel based in Rhode Island but engaged in fishing in the waters of several states including Massachusetts. Ethel determines that she has worked within Massachusetts 50 days during the year and earned $12,000 during the year from fishing in Massachusetts waters; however, when Ethel receives her W-2 Form for the preceding year in January, it shows that no amount was withheld from her wages for state tax purposes.

ISSUE: Does Ethel, a nonresident working on a fishing vessel, owe income taxes to Massachusetts despite the fact that no amounts for those taxes were withheld from her wages?

DISCUSSION: Withholding/Liability for Tax.
Under 46 U.S.C. § 11108, "[w]ages accruing to a master or seaman on a vessel in the foreign, coastwise, intercoastal, interstate, or noncontiguous trade or an individual employed on a fishing vessel or any fish processing vessel may not be withheld under the tax laws of a State or any political subdivision of a State." Id. This provision was intended to prevent multiple withholding from wages of seamen who might be in ports of different states when they receive pay. Streckfus Steamers, Inc. v. Saint Louis, 472 S.W.2d 660 (Mo. App.) cert. denied 409 U.S. 841 (1971). The provision does not, however, prevent Massachusetts from lawfully imposing taxes on income earned by nonresidents within the boundaries of Massachusetts. See Schaffer v. Carter, 252 U.S. 27 (1920).

Massachusetts taxes nonresidents only on income derived from, or effectively connected with:

(1) any trade or business carried on in Massachusetts;
(2) employment carried on in Massachusetts;
(3) participation in any lottery or wagering in Massachusetts; and
(4) ownership of any interest in real or tangible property located in Massachusetts.

A nonresident generally does not have a trade, business or employment in Massachusetts if his or her presence for business in Massachusetts is casual, isolated and inconsequential; it will be considered so if one of the following three tests is met:

(1) the nonresident is in Massachusetts for 10 days or fewer during the taxable year; this test cannot apply, however, if the nonresident earns more than $6,000;

(2) the nonresident earns $6,000 or less; or

(3) the nonresident's presence for business in Massachusetts is ancillary to the nonresident's primary business or employment duties performed outside of Massachusetts.

830 CMR 62.5A.1.

Here, Ethel earned $12,000 from activities carried on in Massachusetts. Since this is more than the maximum permitted under the second of the tests articulated above, Ethel has a trade, business or employment in Massachusetts and owes income taxes here.


A nonresident must file Form 1-NR if Massachusetts source income exceeds the personal exemption to which he or she is entitled under G.L. c. 62, § 3. This is generally $2,200 ($4,400 if married filing jointly). For detailed treatment of the Massachusetts nonresident income tax, see 830 CMR 62.5A.1, Nonresident Income Tax.

Estimated Taxes.

Under G.L. c. 62B, § 13, every person who reasonably expects to owe more than $200 in tax on income not subject to withholding is required to pay over estimated taxes. These payments must be made in four equal installments on April 15, June 15, September 15 of the taxable year and on January 15 of the succeeding year. G.L. c. 62B, § 14(c). However, in the case of a fisherman there is no addition to tax imposed under G.L. c. 62B, § 14(a) if a return is filed and the total tax due is paid by March 1 of the succeeding taxable year. G.L. c. 62B, § 14(h). The estimated taxes paid must total the lesser of:

(1) 80% (or, in the case of a fisherman, 66⅔%) of the tax shown on the return for the taxable year; or

(2) 100% of the tax shown on the taxpayer's return for the preceding taxable year.

G.L. c. 62B, § 14(c)(i),(ii). Failure to pay estimated taxes when due or in the amounts required will, except in certain limited circumstances, result in the imposition of an addition to the tax due of 18% of the underpayment for the period of the underpayment. G.L. c. 62B, § 14(a).

DIRECTIVE: Despite the fact that there was no withholding, Ethel, a nonresident, must file Form 1-NR, the Nonresident Income Tax Return, and pay income taxes on the $12,000 of income she earned while fishing in Massachusetts waters. During the year, she must also pay estimated taxes to Massachusetts in accordance with the rules set out above.

REFERENCE: 46 U.S.C. § 11108; G.L. c. 62B, §§ 13, 14(a), (c), (h); Streckfus Steamers, Inc. v. Saint Louis, 472 S.W.2d 660 (Mo. App.) cert. denied. 409 U.S. 841 (1971); 830 CMR 62.5A.1.

/s/Stephen W. Kidder
Stephen W. Kidder
Commissioner of Revenue

December 11, 1989

DOR D 89-21

This Directive represents the official position of the Department of Revenue on the application of the law to the facts as stated. The Department and its personnel will follow this Directive, and taxpayers may rely upon it, unless it is revoked or modified pursuant to 830 CMR 62C.01(5)(e). In applying this Directive, however, the effect of subsequent legislation, regulations, court decisions, Directives, and TIRs must be considered, and Department personnel and taxpayers may rely upon this Directive only if the facts, circumstances and issues presented in other cases are substantially the same as those set forth in this Directive.

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