Under Massachusetts General Law, the Department of Revenue (DOR) may impose penalties on taxpayers who fail to meet their tax obligations.
These penalties are used to encourage the Commonwealth's taxpayers to voluntarily file and pay their taxes.
Penalties may be waived or abated. However, interest cannot be waived or abated.
Understanding and appealing penalties
Generally, penalties imposed for the late filing of a return (G.L. c. 62C, § 33(a)) or the late payment of tax (G.L. c. 62C, § 33(b)) may be waived or abated, in whole or in part, if you can demonstrate that the failure to timely file your return or to pay your tax was due to reasonable cause and not willful neglect.
However, different standards may apply for other types of penalties, such as
- Penalties imposed under G.L. c. 62C, § 35A, for the substantial understatement of tax or
- Penalties imposed under G.L. c. 62C, § 35D, for taking an inconsistent filing position in reporting your income subject to tax.
Visit Learn about the assessment of penalties for more information.
- Administrative Procedure 633: Guidelines for the Waiver and Abatement of Penalties
- Directive 12-7: Section 35A Penalty for Underpayment of Tax Required to be Shown on Return.
How to appeal a penalty
- If you are audited, you may submit a request for a waiver of penalties to the auditor. Pre-assessment conferences for penalties will be held by the Office of Appeals if the tax Division disagrees with your request.
- To appeal penalties after an assessment has been made, you must request an abatement.
- If a settlement is requested, you must also submit a Form DR-1: Office of Appeals Form.
Visit DOR Tax Appeals for more information.
Interest is charged on unpaid penalties as well as on unpaid tax.
The Massachusetts interest rate for underpayments is equal to the federal short-term rate (which can change quarterly) plus four percentage points, compounded daily.
The Massachusetts interest rate for overpayments is equal to the federal short-term rate (which changes quarterly) plus two percentage points, simple interest.
- These changing rates are published through the Technical Information Releases section of the DOR Legal Library.
Interest will continue to add to any outstanding unpaid balance of tax and penalties. The only way to stop interest from accruing is to pay the tax and penalties. If you are successful in your appeal and entitled to a refund, the Commonwealth will pay interest on any amounts refunded.
DOR does not have the legal authority to abate or waive interest alone but if a tax or penalty amount is reduced, related interest will be adjusted
Visit Learn about the interest on your tax underpayment or overpayment for more information.
Penalty rate table
|Type of Civil Penalty||Penalty Amount/Rate||References|
|Failure to File Timely Return||1% per month, or fraction thereof, of the unpaid tax up to a maximum of 25%||Mass. General Laws c. 62C, § 33(a)|
|Failure to Pay a Tax When Due||1% per month, or fraction thereof, of the unpaid tax up to a maximum of 25%||Mass. General Laws c. 62C, § 33(b)|
|Failure to Pay Deficiency Assessment||1% per month, or fraction thereof, of the unpaid tax up to a maximum of 25%, combined with section 33(b) above||Mass. General Laws c. 62C, § 33(c)|
|Failure to File Return After Notice or Filing of a Fraudulent Return||Up to double the tax amount determined to be due.||Mass. General Laws c. 62C, § 28|
|Failure to Report Federal Change||10% of the additional tax||Mass. General Laws c. 62C, § 30|
|Underpayment of Estimated Tax Penalties-Income Tax and Corporate Excise||Interest at an annual rate equivalent to the federal short‑term rate plus four percentage points||Mass. General Laws c. 62C § 32(a) and c. 62B, § 14(a) and (b) or G.L. c. 63B, § 3|
|Demand Charge||$30 per demand for payment missed||Mass. General Laws c. 62C, § 46 and G.L. c. 60, § 15|
|Dishonored Check or Failed Electronic Funds Transfer||$30 or the amount of the payment, whichever is less, for payments under $1,500; 2% of the payment for payments $1,500 or greater||Mass. General Laws c. 62C, § 35|
|Failure to File, Report or Pay Electronically||Up to $100 for each failure to file returns, transfer data, or pay electronically as required by the Department||Mass. General Laws c. 62C, § 33(g)|
|Depository Filer Failure to Make Deposits||5% of the underpayment||Mass. General Laws c. 62C, § 45A|
|Failure to File Wage Reports||Up to $25 per employee, contractor, or other recipient of periodic income or, if the result of a conspiracy between employer and recipient not to file the required report, $500 for each recipient.||Mass. General Laws c. 62E, § 9|
|Failure to Withhold, File Returns or Pay Over Taxes||Fine of $100 - $5,000, or imprisonment for not more than 1 year or both||Mass. General Laws c. 62B, § 7|
|Failure to File Report of Income Paid to Persons||$1 for each such report not filed, up to $1,000. In addition, a payor of taxable income is subject to a fine of $25 - $500 for a failure to file with DOR without reasonable cause.||Mass. General Laws c. 62C, §§ 34 and 77|
|Fraudulent Estate Tax Returns||50% of the underpayment||Mass. General Laws c. 65C, § 13|
|Failure to File a Partnership Return||$5 for every day the partnership fails to file||Mass. General Laws c. 62C, § 34
|Promoter Failure to File a Required Report||$5 for every day for which the report is not filed||Mass. General Laws c. 62C, § 34|
|Negligence or Substantial Underpayment||20% of the underpayment||Mass. General Laws c. 62C, § 35A|
|Return Preparer Penalty||
$1,000 per return or claim
Greater of $1,000 or 10% of understatement
|Inconsistent Filing Position||Equal to the amount of tax attributable to the inconsistency||Mass. General Laws c. 62C, § 35D|
|Promoters of Abusive Tax Shelters||Up to $5,000 for each client to whom the statement was made||Mass. General Laws c. 62C, § 35E|
Calculate penalty/interest on a late filed income return or underpayment of estimated tax (M-2210)
This is a tool to help calculate late file and late pay penalties and interest on a late filed Personal Income tax return. It can also be used to compute the penalty for underpayment of estimated tax (M-2210). Only use the calculator when you are sending your return and payment together.
Learn how to appeal the health care penalty
If you've received a penalty for not getting health insurance, you can appeal it. All health care penalty appeals start with filling out Schedule HC, Health Care Information. Appeals based on hardship or special circumstances will be heard by the Massachusetts Health Connector.
When a responsible person fails to file and/or pay business tax
If a corporation or partnership fails to pay DOR any of their required taxes, the person or persons who are responsible to collect and remit these taxes may be held personally liable for:
and any other amounts due to DOR.
This could include penalties and interest gained before the date a personal liability is established.
For more information visit 830 CMR 62C.31A.1: Responsible Persons.
The willful evasion of taxes is a felony punishable by imprisonment for up to five years and/or a fine for each offense up to:
- $100,000 for individuals or
- $500,000 for corporations
In addition to imprisonment and/or a fine, the tax, penalty, and interest will also be owed.