Learn about the assessment of penalties

Learn about the penalties for failure to make a tax payment.

Bounced Check Penalty

If a check in payment of any tax, interest, penalty, or fee is bounced (dishonored), there will be a penalty in addition to any other penalties.

For payments under $1500:

  • The amount of the penalty is $30 or
  • The amount of the payment, whichever is less.

For payments $1500 and greater:

  • The amount of the penalty is equal to 2% of the payment.

Reasonable Cause

A penalty won’t be imposed if the person tendered such check in good faith and with reasonable cause to believe that it would be duly paid.

DOR may abate any such penalty in whole or in part.

Dishonored Electronic Funds Transfers (EFT) Payment Penalty

The penalty for dishonored checks is extended to EFT. If an EFT is made in the tax payment, and the transfer fails, the penalty will apply.

The amount of the penalty is $30 or the amount of the payment, whichever is less.

Reasonable Cause

Taxpayers who follow EFT guidelines established and publicized by DOR:

  • Enter all required information accurately and timely, and

  • Ensure both that their bank is capable of carrying out the transaction and that funds are available for payment won't be subject to this penalty.

Unforeseeable errors or system failures on the part of

  • Taxpayers' bank,
  • Massachusetts or its agents

won’t subject taxpayers to the penalty for failed checks or EFTs.

Failure to File, Report or Pay Electronically Penalty

DOR requires certain taxpayers to file returns and make payments of tax in a

  • Manner
  • Format and
  • Medium.

DOR requires certain taxpayers to file and pay electronically to:

  • Increase DOR's operating efficiencies and
  • Reduce the costs of maintaining both paper and electronic compliance and processing systems.
     

Taxpayers will be considered not to have made the required filing or the required payments if they don't comply with the prescribed method for:

  • Filing,
  • Data transfer, or
  • Payment.

DOR may assess the penalty by issuing 2 notices

The first notice informs taxpayers that they filed in the wrong format and sets out the:

  • Filing period and
  • Tax type or filing requirement affected
  • Amount of the penalty and
  • Reason for the penalty.

The second notice assesses the penalty.

Reasonable Cause

Penalties may be waived or abated in whole or in part if the filer shows that the failure to file in the correct format is due to reasonable cause and not to willful neglect.

Penalty for Failure to Purchase Health Insurance

Massachusetts Interaction with New Federal Health Insurance Penalty

Under G.L. c. 111M, s. 2, the Massachusetts Health Care Reform Act requires most adults 18 and over with access to affordable health insurance to obtain it.

Since 2015, individuals must be enrolled in health insurance policies that meet minimum creditable coverage standards. These regulations are defined by the Health Connector (Connector).

Individuals who are deemed able to afford health insurance but fail to comply are:

  • Subject to penalties for each month of non-compliance in the tax year
  • Provided that there is no penalty in the case of a lapse in coverage of 63 consecutive days or less.

The penalties:

  • Will be imposed through the individual's income tax return and
  • Will not exceed 50% of the minimum monthly insurance premium for which an individual would have qualified through the Connector.

These penalties apply only to adults who are deemed able to afford health insurance. On an annual basis, the Connector establishes separate standards that determine whether

  • Individuals
  • Married couples and
  • Families

can afford health insurance, based on their:

  • Incomes and
  • Affordable health insurance premiums.

Those who aren’t deemed able to afford health insurance according to these standards will not be penalized.

Individuals also have the opportunity to file appeals with the Connector to assert that:

  • Hardship prevented them from purchasing health insurance and
  • They shouldn't be subject to tax penalties.

2015 Penalty Based on Income as a Percentage of the Federal Poverty Level

  • Individuals with incomes up to 150% of the Federal Poverty Level aren't subject to any penalty for non-compliance, as those at this income level aren't required to pay an enrollee premium for ConnectorCare health insurance.
  • Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced ConnectorCare enrollee premium that could be charged to an individual at the corresponding income level, based on the ConnectorCare enrollee premiums as of January 1, 2015.
  • Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be:
    • Ages 18-30: half of the lowest priced individual Catastrophic Plan offered through the Health Connector; and
    • Ages 31 and above: half of the lowest priced individual Bronze premium, based on the Health Connector’s prices for these plans as of January 1, 2015.
  • DOR anticipates issuing an updated penalty schedule for the tax year 2016.
  • Penalties for married couples who don't comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.

Massachusetts Interaction with Federal Health Care Shared Responsibility Payment

Beginning January 1, 2014, the Affordable Care Act instituted a federal mandate on individuals to obtain health insurance.

For tax years beginning on or after January 1, 2014:

  • If a nonexempt individual fails to obtain health insurance meeting federal standards, the person is liable for a
  • This “shared responsibility payment” must be reported on his or her federal income tax return.

To prevent assessing a taxpayer both a federal and Massachusetts penalty, the amount of any federal health care shared responsibility payment is allowed as a reduction of the Massachusetts health care penalty owed.

Late File and Late Pay Penalties

Section 21 of Chapter 182 of the Acts of 2008

Effective July 1, 2008, the rate at which late payment penalties under G.L. c. 62C, s. 33 (b) and (c) accrue are increased from one-half of 1% a month to 1% a month.

  • Late File Penalties on Amount Required to Be Shown as Tax on the Return - 33(a):
    If a return isn’t filed with DOR on or before its due date or within any extension of time granted by DOR, a penalty of 1%  will be added to the amount required to be shown as tax on the return for:
    •  Each month or
    • A fraction of that during which such failure continues not to exceed 25%.
  • Late Pay Penalties on Amount Shown as Tax on the Return - 33(b):
    Effective July 1, 2008, if any amount of tax isn’t paid to DOR on or before the date prescribed for payment of such tax, determined with regard to any extension of time for payment,  a 1 % penalty will be added to the amount of such tax for:
    •  Each month or
    • A fraction of that during which such failure continues not to exceed 25%.
  • Late Pay Penalties on Amount Required to Be Shown as Tax on the Return - 33(c):
    Effective July 1, 2008, if any amount of tax required to be shown on a return is not shown, including an assessment made per chapter 62C, and such tax isn’t paid within 30 days following the date of the notice of the tax due, a 1% percent penalty will be added to the amount of such tax for:
    • Each month or
    • A fraction of that during which such failure continues not to exceed 25%.

Tax on the return is tax after applying:

  • Withholding,
  • Estimated and
  • Extension payments.

Reasonable Cause for Late File/Pay Penalties

If a taxpayer can document that the failure to file a return or to pay a tax in a timely manner is due to reasonable cause and not due to willful neglect, the penalties imposed under the statute may be abated by DOR.

The abatement of late interest isn't:

  • Discretionary and
  • DOR doesn’t have the authority to abate interest accrued on unpaid or late paid tax.

Interest can be reduced only as a result of:

  • A tax that is being abated, or
  • If the amount of interest charged was miscalculated.

Partnership Return Failure to File Penalty

If a partnership required to file a return under Section 7 fails to file the return within the time provided a penalty of $5 will be assessed for every day the return isn't filed. 

Penalties for Tax Preparers

A preparer who is "willfully" a party to a false or fraudulent return is guilty of a felony and may be:

  • Fined not more than $100,000 ($500,000 for a corporate return) or
  • Imprisoned for 3 years, or
  • Both, plus the costs of prosecution.

A tax preparer who improperly discloses information about a taxpayer`s return may be:

  • Punished by a fine of not more than $500 or
  • Imprisoned for no longer than 6 months, or
  • Both.

If a preparer makes an error, which results in the taxpayer owing additional

  • Tax,
  • Penalties or
  • Interest,

there are no preparer penalties.

Reporting a Penalty for Failure to file to Purchase Health Insurance

Residents must complete the:

Part-year Residents must complete the:

For more information on Health Care, see Health Care Reform.

Other Penalties

Enter the penalty amount in the appropriate box on:

  • Mass Form 1, Line 48 or
  • Mass Form 1-NR/PY, Line 52

Make sure to enter the amount in the total of either Line 48 or 52.

Submitting an Abatement or Amended Tax Return

Late file and Late Pay Penalties

If you're filing an abatement or amended tax return, please provide the following:

  • Brief but factual explanation detailing the reasonable cause for the late filing of a return or late payment of tax due
  • Copy of the IRS determination if available.

Additional Information

Dishonored (Bounced) Check Penalty and Electronic Funds Transfers (EFT) Payment Penalty


Failure to File, Report or Pay Electronically Penalty

Health Insurance, Penalty for Failure to file to Purchase


Late File and Late Pay Penalties

Partnership Return Failure to File Penalty

Tax Preparers Penalty

 

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