830 CMR: DEPARTMENT OF REVENUE
830 CMR 62C.00: STATE TAX ADMINISTRATION
830 CMR 62C.00 is amended by adding the following section:
830 CMR 62C.84.1: Spousal Relief From Joint Income Tax Liability
Regulation 830 CMR 62C.84.1: Spousal Relief From Joint Income Tax Liability
830 CMR: DEPARTMENT OF REVENUE
Table of Contents
(1) Statement of Purpose; Effective Date; Organization
(a) Statement of Purpose. 830 CMR 62C.84.1 contains the criteria and procedure a taxpayer must follow in applying for relief from liability for a substantial understatement of tax on a joint return under M.G.L. c. 62C, § 84, where the understatement of tax was attributable to grossly erroneous items of the taxpayer's spouse.
(b) Effective Date. 830 CMR 62C.84.1 applies to all taxable years for which a claim for credit or refund is not otherwise barred under M.G.L. c. 62C, § 37.
(c) Organization. 830 CMR 62C.84.1 is organized as follows:
1. Statement of Purpose; Effective Date; Organization
3. Relief from Joint Income Tax Liability
4. "Inequitable" Described
5. Application Procedure
6. Effect of Determination
For the purposes of 830 CMR 62C.84.1, the following terms have the following meanings unless the context requires otherwise:
Applicant or Tax Relief Applicant, the taxpayer seeking relief, under M.G.L. c. 62C, § 84, from liability for a substantial understatement of tax due on a joint return.
Assessment, the act of determining or verifying the amount of tax due from a taxpayer and the entry of such amount on the Commissioner's assessment records, including the acceptance of a taxpayer's calculation and declaration of tax as reported on a proper return, including any amendment, correction, or supplement thereto, duly filed by the taxpayer with the Commissioner.
Commissioner, the Commissioner of Revenue or the Commissioner's duly authorized representative.
Grossly Erroneous Items, the term "grossly erroneous items" means, (i) any item of gross income which is omitted from gross income, and (ii) any claim of a deduction, exemption, credit, or basis in an amount for which there is no basis in fact or law.
Joint Return, a joint return of personal income tax as provided under M.G.L. c. 62C, § 6(a).
Substantial Understatement, an "understatement" is the understated tax resulting from grossly erroneous items attributable to a tax relief applicant's spouse. To be "substantial," such understated tax must exceed $200 where due to an item or items omitted from gross income; or exceed $500 where due to a claim or claims of deduction, exemption, credit, or basis in an amount for which there is no basis in fact or law. For purposes of this paragraph, the term "tax" excludes interest and penalties.
Tax or taxes, any tax, interest, penalty, or addition to tax imposed by M.G.L. chs. 62, 62B, and 62C, including any act in addition thereto or amendment thereof, to the extent that all such provisions apply to personal income tax.
(3) Relief from Joint Income Tax Liability
In general, a husband and wife are jointly and severally liable for the entire tax due on a joint return. M.G.L. c. 62C, § 6(a). However, a taxpayer may be relieved from liability for tax to the extent that such liability is attributable to a substantial understatement of tax attributable to grossly erroneous items of the taxpayer's spouse, and
(a) a joint return was filed for the taxable year in which there is a substantial understatement of tax, and
(b) the taxpayer establishes that he or she did not know of, and had no reason to know that there was a substantial understatement of tax, and
(c) it is inequitable, as described in 830 CMR 62C.84.1(4), to hold the taxpayer liable for the deficiency in tax.
Community property laws will be disregarded in determining the spouse to whom grossly erroneous items are attributable to under 830 CMR 62C.84.1(3).
(4) "Inequitable" Described
Whether it is inequitable to hold a person liable for a deficiency in tax, within the meaning of 830 CMR 62C.84.1, is to be determined on the basis of all the facts and circumstances. In making such a determination, factors that will be considered, but that are not necessarily conclusive, include:
(a) whether the tax relief applicant is divorced or separated from his or her spouse; and
(b) whether the tax relief applicant significantly benefited, directly or indirectly, from the substantial understatement of tax.
For purposes of this paragraph, 830 CMR 62C.84.1(4)(b), maintaining a normal standard of living is not considered a significant benefit. However, if it is determined that a tax relief applicant maintains a standard of living inconsistent with the amount of income reported on the return, then the applicant may be considered to have benefited.
Transfers of property, including transfers received several years after the year of the substantial understatement of tax, will constitute evidence of direct or indirect benefit. Thus, for example, if a tax relief applicant receives an inheritance of property or life insurance proceeds which are directly or indirectly traceable to omissions or understatements of gross income by the applicant's spouse, the tax relief applicant will be considered to have benefited from those items.
(5) Application Procedure
(a) Time and Manner of Application. A taxpayer wishing to apply for relief from liability for a substantial understatement of tax on a joint return under M.G.L. c. 62C, § 84, must submit an Application for Relief (Form 84) (as described in 830 CMR 62C.84.1(5)(b)) to the Commissioner within the time prescribed for challenging a proposed assessment or within the time prescribed for challenging an assessment. See M.G.L. c. 62C, §§ 26 and 37; 830 CMR 62C.26.1 and 830 CMR 62C.37.1.
1. Application Prior to Assessment by the Commissioner. Where an Application for Relief is made before an assessment by the Commissioner, for example, pursuant to a Notice of Intention to Assess (NIA), the procedures set forth in M.G.L. c. 62C, § 26, and 830 CMR 62C.26.1 apply. The Application for Relief (Form 84) must be received by the Commissioner by the later of the thirtieth day following the issuance of a Notice of Intention to Assess (NIA) or by the thirtieth calendar day following the promulgation of 830 CMR 62C.84.1. The tax relief applicant is entitled to a conference, as provided in 830 CMR 62C.26.1(6)(d), if one is requested in writing within the period described above, for submitting Form 84. Where a conference is requested, the applicant must attach the Application for Relief (Form 84) to the written request for a conference.
2. Application Subsequent to Assessment. Application for relief made after an assessment of tax by the Commissioner, must be made by filing an Application for Abatement (Form CA-6) in accordance with the procedures set forth in M.G.L. c. 62C, § 37, and 830 CMR 62C.37.1. The tax relief applicant may attach the Application for Relief (Form 84) to the Application for Abatement or may amend a pending Application for Abatement by submitting Form 84 before the Commissioner has acted upon the Application for Abatement. The tax relief applicant is entitled to a hearing if one is requested on the Form CA-6 or by separate written request made before the Commissioner has acted upon the Application for Relief.
In accordance with CMR 62C.26.1, notices regarding income tax liability are sent to a taxpayer's last known address as it appears on the taxpayer's most recent income tax return or on a properly completed and submitted Change of Taxpayer's Address form, whichever is last received by the Commissioner. However, a tax relief applicant's failure to receive a notice of intention to assess or a notice of assessment does not affect the validity of a subsequent assessment nor does it extend the period for claiming relief under M.G.L. c. 62C, § 84, set forth in 830 CMR 62C.84.1(1)(b).
Note, that a federal determination that a taxpayer qualifies for relief under I.R.C. § 6013(e) is not considered a change by the federal government in a person's federal taxable income as described in M.G.L. c. 62C, § 30, and will not extend the period for filing an Application for Abatement for purposes of claiming relief under M.G.L. c. 62C, § 84, beyond the period provided in 830 CMR 62C.84.1(1)(b).
(b) Content of Application for Relief From Joint Income Tax Liability (Form 84). The Application for Relief (Form 84) must contain (i) the name, address and taxpayer identification numbers of the applicant and the applicant's spouse; and (ii) a written statement or affidavit, signed under the penalties of perjury, containing any and all facts necessary for determining that the requirements of 830 CMR 62C.84.1(3) are satisfied. The burden is on the taxpayer to establish that he or she qualifies for relief under M.G.L. c. 62C, § 84. All applicants must indicate on the Application for Relief whether or not they have applied for and received relief from federal tax liability under I.R.C. § 6013(e). Copies of the following federal forms, including any supporting or related documentation, should be attached to the Massachusetts Application for Relief where applicable: (i) the federal claim for relief, (ii) the federal determination, and (iii) the federal return.
(c) Written Notice of Determination. The Commissioner will make a determination of liability based on all the facts and circumstances and issue a written notice thereof to the tax relief applicant.
(d) No Stay of Collection. The filing of an Application for Relief (Form 84) will not operate to stay the collection of tax unless or until the application is approved by the Commissioner. If the application is approved, a refund of any resulting overpayment of tax, if any, will be made to the tax relief applicant.
(6) Effect of Determination
A grant of relief by the Commissioner under M.G.L. c. 62C, § 84, and 830 CMR 62C.84.1, relieves the tax relief applicant of liability for income tax only to the extent specified in the Commissioner's determination. The tax relief applicant remains jointly and severally liable for any amounts where relief is not provided. Additionally, the applicant's spouse remains liable for the entire tax determined to be due. Where the Commissioner finds that relief was obtained by false or fraudulent means, the grant of relief is void.
830 CMR 62C.84.1: M.G.L. c. 14, § 6(1); M.G.L. c. 62C, § 3; M.G.L. c. 62C, § 84.
Date of Promulgation: 8/12/94