Regulation 830 CMR 62C.37.1: Abatements

Date: 02/24/2017
Organization: Massachusetts Department of Revenue
Regulatory Authority: Massachusetts General Laws
Official Version: Published by the Massachusetts Register

830 CMR 62C.37.1 is repealed and replaced with the following:
830 CMR 62C.37.1: Abatements

Table of Contents

(1) Statement of Purpose; Organization

(a)   The purpose of 830 CMR 62C.37.1 is to explain how, under M.G.L. c. 62C, § 37, a person may apply for an abatement of tax or penalty that has been assessed by DOR (e.g. “deficiency assessment”).  830 CMR 62C.37.1 also explains how a taxpayer may:

1.    dispute a responsible person determination
2.    dispute  a state-collected motor vehicle excise assessment
3.    seek an abatement of self-assessed tax on behalf of a vendor/operator
4.    seek an abatement when an amended return is treated as an application for abatement
5.    seek relief from joint tax liability, or
6.    seek an abatement as otherwise provided for by the Commissioner.

As of December 5, 2016, an amended return shall be filed by all taxpayers, except as specified above, when seeking to increase a previously self-assessed tax; decrease a previously self-assessed tax; report an increase in tax resulting from a final federal or state determination; report a decrease in tax resulting from a federal or state determination; and report amendments that have no net effect on the tax shown on a return.  An amended return shall be filed in the manner prescribed by the Commissioner in 830 CMR 62C.26.2, 830 CMR 62C.30.1 or 830 CMR 62C.30A.1, as applicable. Such filers will no longer file an abatement application to amend a return and, except as specified, an amended return is not a form approved by the commissioner to seek abatement of tax.

(b)   830 CMR 62C.37.1 is organized as follows:

1.  Statement of Purpose; Organization
2.  Definitions
3.  Time for filing Application
4.  Limitations on Amount of Abatement
5.  Application for Abatement
6.  Substantiation Requirements; Denial for Failure to Substantiate
7.  Hearing on the Application
8.  Decision on the Application
9.  Abatement of Additional Tax or Penalty
10.  Erroneous Refunds

(2) Definitions

For the purposes of 830 CMR 62C.37.1 only, the following terms shall have the following meanings:

Abatement, a reduction of an amount of tax that equals the difference between the amount of tax assessed as a result of an assessment or deemed assessment and the lower amount of tax properly due.

Assessment, (1) the issuance of a Notice of Assessment to a taxpayer, or the entry in the Commissioner’s assessment records of an amount due from the taxpayer, if such entry predates the Notice of Assessment; or (2) the taxpayer’s calculation and declaration of the tax due, as provided under M.G.L. c. 62C, § 26(a), completed on a return, or on any amendment, correction, or supplement thereto, by the taxpayer or the taxpayer’s representative and duly filed with the Commissioner, in accordance with rules adopted by the Commissioner; provided, however, that for purposes of the time limit for the taxpayer to apply for an abatement, the date of assessment shall not be before the date of Notice of Assessment.

Commissioner, the Commissioner of Revenue or the Commissioner’s designee duly authorized to perform the duties of the Commissioner.

Department, the Department of Revenue.

Original Return, the original tax return filed by the taxpayer for the tax year at issue.

Tax or Taxes, any tax imposed under M.G.L. chs. 60A, 62 through 65C, c. 121A § 10, and c. 138, § 21, and any penalties imposed under M.G.L. c. 62C.

Taxpayer, any person required to pay taxes imposed under M.G.L. chs. 60A, 62-64J, inclusive, 65B and 65C, 121A, § 10, and 138, § 21 or required to file returns under M.G.L. c. 62C, §§ 6-8, 10-14, and 16-18.

(3) Time for Filing Application

(a)   General Rule.  An application for abatement may be filed at any time within three years from the date of filing of the original return, taking into account paragraph (a) of section 79 of M.G.L. c. 62C, within two years from the date the tax was assessed or deemed to be assessed, or within one year from the date that the tax was paid, whichever is later.

(b)   Exception to General Rule if Commissioner and Taxpayer Agree to Assessment Extension.  If the Commissioner and the taxpayer have agreed to extend the period for assessment of a tax pursuant to M.G.L. c. 62C, § 27, the application for abatement may be made within the assessment extension period.

(4) Limitations on Amount of Abatement

If more than three years have expired from the date of filing of the original returntaking into account paragraph (a) of section 79 of M.G.L. c. 62C, and an application for abatement is filed within two years of an assessment the Commissioner will grant an abatement up to the amount of that assessment.  If the time for filing an abatement application has otherwise expired and an application for abatement is filed within one year of a payment of a portion of an assessment, the Commissioner will not grant an abatement in excess of the payment.

(5) Application for Abatement

(a)   Prerequisites.

1.     Return.  Any taxpayer filing an application for abatement of an assessed tax shall have filed, at or before the time of filing the application, a tax return for the period to which the application relates as required by M.G.L. c. 62C.  Filing a return is not a prerequisite if the abatement application is founded on the assertion that no return is required.

2.     Assessment.  No application for abatement should be filed until the tax is actually assessed. Only upon actual assessment is a person "aggrieved by the assessment of a tax” within the meaning of M.G.L. c. 62C, § 37.

Example:  The Commissioner determines that Vendor A has not reported fully the gross receipts from sales at retail as required by M.G.L. chs. 62C and 64H. After the return is filed, the Commissioner timely notifies A of the Commissioner’s intention to make an additional assessment pursuant to M.G.L. c. 62C, § 26 (b).  No assessment has actually been made. Vendor A should not file an application for abatement until and unless the tax is actually assessed by the Commissioner.

(b)   Form of Application.  Except as noted in 830 CMR 62C.37.1(1)(a) and (5)(d), infra, each applicant shall file an Application for Abatement, either electronically using MTC or on a paper form, and shall set forth, in addition to taxpayer identification,

1.     the type of tax,
2.     the taxable periods,
3.     the amount of abatement requested, and
4.     the specific facts and contentions of law relied upon.  See 830 CMR 62C.37.1(6) for substantiation requirements. 

(c)   Waiver of Time Limitation.  Unless an applicant strikes the consent clause of the application or otherwise withdraws consent in writing, the filing of an application for abatement, including an amended return treated as an abatement application, by an applicant shall act as a waiver of the right to treat the Commissioner's failure to act on the application prior to six months from the date of filing as a denial of the application pursuant to M.G.L. c. 58A, § 6.  This waiver may be withdrawn at any time in writing by the applicant, in which event the application, unless previously acted upon by the Commissioner, shall be deemed to be denied at the expiration of the six months or on the date of withdrawal, whichever is later.

(d)   Change in Federal Taxable Income, Federal Tax Credits, or Federal Taxable Estate or in Tax Liability to Another State or Jurisdiction. A taxpayer should follow the procedures in 830 CMR 62C.30.1 and 830 CMR 62C.30A.1, respectively to report such changes.

(e)   Stay of Involuntary Collection.  The filing of an application for abatement shall stay involuntary collection of the disputed portion of tax imposed by M.G.L. chs. 62, 63, 64A through 64F, 64J through 65C, and by M.G.L. c. 138, § 21 and trustee taxes imposed by M.G.L. c. 62B and by M.G.L. c. 64G through 64I, provided that the taxes imposed under these chapters were not withheld by the employer or collected by the vendor.  The statute of limitations for collection of taxes in M.G.L. c. 62C, § 65, and the date of termination of tax liens in M.G.L. c. 62C, § 50, is extended by the period that collection of the tax is stayed by M.G.L. c. 62C, § 32(e).  Interest and penalties under M.G.L. c. 62C, §§ 33(a) and 33(b) will continue to accrue.  The stay expires on the date on which any right of appeal from a refusal or deemed refusal by the Commissioner to grant an abatement of such tax expires without any appeal to the ATB or the probate court having been filed, or as otherwise provided in M.G.L. c. 62C, § 32(e).

(f)    Multiple Claims.

1.     A taxpayer shall file a separate application for abatement of each tax, penalty or additional assessment or portion thereof for each taxable period; however, where the tax is due on other than an annual basis the taxpayer may file one application combining taxable periods of each calendar year.  If different issues are raised on the combined application, the application must clearly specify which issues are related to each of the periods. A taxpayer using MassTaxConnect may file a dispute for multiple periods on the same account at the same time.

2.     A taxpayer should combine all challenges to an assessment in a single abatement application.  However, a taxpayer may file a subsequent application for abatement concerning the same tax and taxable period as a previous application so long as the taxpayer intends to challenge a portion of the tax different from that challenged in the previous application.  A taxpayer may not file a second application for abatement which puts in issue the identical item of tax for a given period as challenged in a previous application.

The following list illustrates but does not exhaust situations in which a timely second abatement application, concerning the same tax and taxable period as a previous application, would be considered by the Commissioner:

a.   The first application for abatement from a business corporation challenges an assessment by the Department (deficiency assessment) resulting from a final determination by the federal government of a change in the corporation's net taxable income due to disallowance of entertainment expenses, and the second application challenges apportionment of the corporation's net income.

b.   The first application for abatement challenges a deficiency assessment based on under reporting the number of dependents on a personal income tax return, and the second application challenges the deficiency assessment based on an understatement of the taxpayer's social security deduction.

c.   The first application for abatement from an executor liable for the M.G.L. c. 65C estate tax challenges the Commissioner’s determination of the value of decedent's real estate and the second application for abatement challenges the Commissioner’s determination of the value of decedent's closely held business.

3.  The Commissioner would not consider a later application for abatement in the following illustrative cases:

a.   Taxpayer fails to file an appeal to the Appellate Tax Board within 60 days of the denial of the abatement and, in an attempt to revive the taxpayer’s lapsed right of appeal, files an identical second application for abatement with the Commissioner.

b.   The first application for abatement challenges the Commissioner's deficiency assessment based on an interpretation of M.G.L. c. 62 as imposing a tax on interest income from New York City bonds, the second application requests an abatement of the Commissioner’s tax assessment based on the same interest income on the ground that the statute is unconstitutional.

(6) Substantiation Requirements; Denial For Failure to Substantiate

(a)   Substantiation Generally.

1.     An applicant filing an application for abatement, shall attach all supporting information, documents, explanations, arguments and authorities that will reasonably enable the Commissioner to determine whether the applicant is entitled to the abatement amount requested.

2.     The applicant shall not be considered to have submitted a completed written abatement application until the date on which all such information reasonably requested from the applicant and reasonably necessary for a decision, including the amount of abatement claimed and the factual and legal basis for claiming an abatement, has been furnished to the Commissioner.

3.     If the Commissioner has made a written request to the applicant for additional information, not then contained in the taxpayer’s pending abatement application, and the applicant fails to provide such information within 30 days after such request, or within any extended period allowed by the Commissioner, that application shall be considered incomplete and shall be denied without prejudice to its timely renewal.

4.     The Commissioner shall give such applicant written notice that the denial is based upon the lack of sufficient information to grant the taxpayer’s abatement application.

5.     Following a denial of an unsubstantiated abatement application, the applicant may file a new abatement application that must be properly substantiated with additional facts and information within the time limitations of 830 CMR 62C.37.1, and M.G.L. c. 62C, § 37, without regard to the prior filing, or in the alternative, may appeal to the Appellate Tax Board or the probate court on the merits within the time limitations of M.G.L. c. 62C, § 39. The applicant may not file a new abatement application raising the same issues while an appeal is pending on the merits either before the Appellate Tax Board or the Probate court.

6.     The substantiation requirements of M.G.L. c. 62C, § 37, and  830 CMR 62C.37.1, do not preclude a taxpayer from amending a pending, timely filed abatement application to add additional claims based on new legal precedent not available to the taxpayer at the time the application was filed.

(b)   Substantiation of Refund to Purchaser.  If a purchaser is filing an application for abatement on behalf of an operator subject to the room occupancy excise as defined in M.G.L. c. 64G, § 1 or on behalf of a vendor subject to the sales or use tax as defined in M.G.L. c. 64H or c. 64I, § 1 no refund of money shall be made until it is established, to the satisfaction of the Commissioner, that the operator or vendor has repaid or credited or will repay or credit any purchaser who has paid the tax to the operator or vendor in the amount for which the application is made.  The repayment or credit to the purchaser must include all interest paid pursuant to M.G.L. c. 62C, § 40, unless the vendor or operator actually repaid or credited the purchaser the amount in question prior to the filing of the abatement application.  An operator or vendor may use any reasonable method to allocate interest among purchasers that is supported by its books and records.

(7) Hearing on the Application

Any applicant who files an application for abatement may request a hearing upon the application either in the application itself or by separate written request made before the Commissioner has acted upon the application.  The hearing shall be set down for a specific date and the applicant shall be given notice thereof in writing at least ten days before the hearing.  A taxpayer will be entitled to either a pre-assessment hearing under M.G.L. c. 62C, § 26(b) or an abatement hearing under M.G.L. c. 62C, § 37, but not both.  An exception to this one-hearing rule will be made if there is new factual information or new legal precedent that was not available at the time of the pre-assessment hearing or the taxpayer raises a new issue not considered at the pre-assessment hearing.

(8) Decision on the Application

If the Commissioner finds that the tax is excessive in amount or illegal, the tax shall be abated in whole or in part, accordingly.  The Commissioner shall mail or deliver written notice of the decision to grant or deny the abatement application to the taxpayer or the taxpayer’s representative.  The taxpayer may appeal from the Commissioner's decision within 60 days of the date of notice of the decision in accordance with M.G.L. c. 62C, § 39.

(9) Abatement of Additional Tax or Penalty

Refer to M.G.L. c. 62C, § 33 and 830 CMR 62C.33.1, on Interest, Penalties, and Application of Payments, for information on abatement of penalties and interest.

(10) Erroneous Refunds

In the event of an erroneous refund, the provisions of M.G.L. c. 62C, § 36A will apply.

830 CMR 62C.37.1: M.G.L. c. 14, § 6(1); c. 62C, § 3, c. 62C, § 37

Date of Promulgation:  November 30, 2015
Amended by Emergency Regulation 11/30/15
Amended: 2/26/16
Emergency Regulation Promulgated: 12/5/16
Amended: 2/24/1

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