|Referenced Sources:||Massachusetts General Laws|
To encourage the voluntary disclosure and payment of delinquent tax obligations to the Commonwealth, section 11 of chapter 429 of the Acts of 2002, authorizes the Commissioner of Revenue to offer a two-month extension of the amnesty program on substantially the same terms as the amnesty administered between the dates of October 1, 2002 and December 2, 2002. See TIR 02-14. The extended amnesty period will begin on January 1, 2003 and end on February 28, 2003. As discussed below, the two primary modifications from the prior amnesty program are 1) a limited look-back period for unpaid use tax liabilities and 2) payment by installment method for certain taxpayers. See Sections III(A)(4) and III(B)(1) below. Amnesty applications submitted under the prior two-month amnesty program during calendar year 2002 are not eligible for consideration under the Extended Amnesty Program discussed in this TIR.
Under the legislation which authorized both the initial amnesty program [St. 2002, c. 184, §182] and its continuation for the extended amnesty period, if an eligible taxpayer with annual return filing obligations ("Annual Filer") files all required returns for all taxable years beginning before January 1, 2001 and pays the full amount of tax and interest due for all such taxable years and properly and timely files a Request for Extended Amnesty, the Commissioner is authorized to waive all unpaid penalties imposed for failure to timely file a return,1 failure to file a proper return,2 failure to timely pay a tax liability,3 and failure to pay the proper amount of any required estimated tax payments4 for such taxable years. Such Annual Filer must also file a return and pay the full amount of tax liability due for any taxable year beginning on or after January 1, 2001 whose due date for filing is prior to the start of the extended amnesty period.
For eligible taxpayers whose filing responsibilities are for periods other than on an annual basis ("Other Filers"), the Commissioner will waive unpaid penalties, as described above, for any such taxpayer who files all required returns and pays the full amount of tax and interest due for all taxable periods ending on or before August 31, 2002, and properly and timely files a Request for Extended Amnesty. However, in the case of unpaid use tax liabilities, the phrase "all required returns" means those returns required to be filed within the limited look-back period, as determined by the Commissioner. See Section III(A)(4) below.
For subsequent tax periods not eligible for amnesty, both annual filers and other filers are still required to file returns and pay tax when due. Otherwise, amnesty will be denied.
When an eligible taxpayer either: (i) pays the full outstanding balance of tax and interest with respect to previously filed returns or assessments or (ii) files proper and accurate returns and pays the tax and interest due for all periods described above, the Commissioner will forego the assessment of penalties (and only that interest directly attributable to those penalties) as to that taxpayer for those tax periods. [St. 2002, c. 184, § 182.]
Penalties that have been assessed, or that could be assessed by the Commissioner against a taxpayer for liabilities relating to the following tax types are not eligible for waiver under the Extended Amnesty Program:
The Commissioner does not have the sole authority to waive penalties assessed against liabilities for these tax types. Therefore, any such penalties are not available for waiver under the Extended Amnesty Program. [St. 2002, c. 184, § 182.]
The Commissioner has established the extended amnesty period to begin on January 1, 2003 and to end on February 28, 2003.
The Commissioner will grant amnesty to any eligible taxpayer who properly completes and files a Request for Extended Amnesty along with all required tax return(s) and payment of the tax and interest in full. Any return(s) submitted during the extended amnesty period must be properly and accurately completed and must be accompanied with a check or money order for the required amount of tax and interest in full.
A. Eligibility Requirements
1. Eligible Taxpayers
The Extended Amnesty Program is open to all taxpayers that have not already filed a Request for Amnesty during the prior amnesty period and that:
Taxpayers may file combined returns of income, allowed under G.L. c. 63, § 32B, for all eligible tax years, notwithstanding the expiration of procedures for electing such filing under 830 CMR 63.32B.1(4). However, taxpayers may not file returns for inclusion as part of a combined group for any taxable period where the combined group has previously filed a combined return. All other provisions under 830 CMR 63.32B.1 remain in effect.
Taxpayers may apply for alternative apportionment, under G.L. c. 63, § 42, for all eligible tax years, notwithstanding the expiration of time for such application under 830 CMR 63.42.1(3). All other provisions under 830 CMR 63.42.1 remain in effect.
2. Who is Not Eligible
The Commissioner will not grant amnesty under the Extended Amnesty Program to any taxpayer for any tax periods for which the taxpayer is either: (i) the subject of an on-going tax-related criminal investigation or prosecution or (ii) has been the subject of a past tax-related criminal investigation, indictment, or prosecution if that investigation, indictment, or prosecution resulted in a conviction or in any plea by which the taxpayer admitted guilt or chose not to contest the charges. The Commissioner will consider, but need not approve, an application for amnesty by a taxpayer for tax periods as to which the taxpayer has been the subject of a past tax-related criminal investigation, indictment, or prosecution if that investigation, indictment, or prosecution resulted in a not guilty finding or if the investigation, indictment, or prosecution was discontinued without either a trial or plea bargain.
Taxpayers who have signed a settlement agreement with the Commissioner are not eligible to seek amnesty for the tax periods covered by the settlement agreement including, without limitation, any settlement reached through the Department's Litigation Bureau, Office of Appeals (formerly Office of Dispute Resolution) or Offer-in-Settlement Unit.
Taxpayers that have paid all tax and interest due relating to any outstanding assessment but that, at the start of the extended amnesty period, still owe penalties with regard to that assessment are not eligible to seek amnesty for the tax period(s) covered by the assessment. Taxpayers that, as of the start of the Extended Amnesty Program, have requested the waiver of penalties by way of an abatement application or an appeal to the Appellate Tax Board and that have paid all tax and interest but have not paid the penalties due, will not qualify for amnesty with respect to those penalty amounts.
3. Tax Periods
4. Look-Back Rule for Taxpayers with Unpaid Use Tax Liabilities
Under section 11 of chapter 429 of the Acts of 2002, the Legislature granted the Commissioner the discretion to observe a limited look-back period for that portion of an amnesty request that involves an unpaid use tax liability. For individual filers who have made purchases for personal use, the Commissioner has determined that a limited look-back period, for purposes of the Extended Amnesty Program only, shall be the four most recent tax years (i.e. 1998-2001). For all other filers, the Commissioner has determined that the limited look-back period, for purposes of the Extended Amnesty Program only, shall be the six most recent tax years (i.e. 1996-2001). However, depending upon the facts and circumstances of each case disclosed to the Commissioner as part of the taxpayer's Request for Extended Amnesty, the Commissioner may consider whether further adjustment to this look-back period is warranted.
Taxpayers seeking a waiver of tax, interest and penalties for periods prior to any look-back period must pay the full amount of unpaid use tax plus interest due for all periods within the look-back period by February 28, 2003.
5. Responsible Persons
A responsible person, as defined under G.L. c. 62C, § 31A, is any person who is or was under a duty to pay over taxes imposed on a corporation or partnership by G.L. chs. 62B, 64G, 64H, or 64I. A responsible person is eligible to participate in the Extended Amnesty Program as long as such person pays the full amount of tax and interest due for all eligible tax periods and properly and timely files a Request for Extended Amnesty. The Commissioner will consider such payment as satisfaction of the responsible person's personal liability. As provided in Section 12(b) of the Department's Responsible Person's regulation, 830 CMR 62C.31A.1, such payment will not satisfy the liability of the corporation or partnership or any other responsible person until one of the following conditions is satisfied:
For further information concerning responsible persons, refer to the remaining provisions of 830 CMR 62C.31A.1.
6. Taxpayers Under Current Payment Agreements
Taxpayers who have entered into a Payment Agreement with the Department prior to the start of either the initial amnesty period or the extended amnesty period are eligible to participate in the Extended Amnesty Program. The Commissioner will waive eligible penalties associated with any remaining installment payments due under the Payment Agreement, as long as the taxpayer pays the remaining amount of tax and interest due in full, and properly and timely files a Request for Extended Amnesty. The Commissioner will not waive any penalties associated with the tax liability covered by the Payment Agreement that have already been paid with past installment payments made in accordance with the provisions of the Payment Agreement.
7. Appeals Pending
Any taxpayer who has an appeal pending with respect to an assessment made by the Commissioner is eligible for participation in the Extended Amnesty Program if the taxpayer pays all taxes and interest owed in full, and properly and timely files a Request for Extended Amnesty. Payment of the outstanding liability does not constitute a forfeiture of statutory rights of appeal or an admission of liability for the disputed assessment. For those taxpayers that have, prior to the start of the Extended Amnesty Program, postponed the payment of an assessment of tax, interest and penalty under G.L. c. 62C, § 32(e), a written waiver of all rights under this section to further delay the payment of the tax and interest portions of the assessment must be made to participate in the Extended Amnesty Program. [St. 2002, c. 184, § 182.] This waiver is to be made on the Request for Extended Amnesty, properly and timely filed, accompanied by all required returns and full payment of the tax and interest assessed.
B. Payment Requirements
1. Payment In a Lump Sum or by Installments
Except as noted below for certain taxpayers having outstanding liabilities of $25,000 or less, all taxpayers must make a full payment of all taxes and interest due for all tax types and tax periods, as discussed in Section III (A)(3) of this TIR, to be eligible for consideration under the Extended Amnesty Program. All payments made by taxpayers under the Extended Amnesty Program must be in the form of a check or money order made payable to the Commonwealth of Massachusetts. Presentation of a check that is not duly paid because of insufficient funds will result in an automatic denial of amnesty.
The legislation which authorized the extended amnesty period [St. 2002, c. 429, § 11] has added a special rule for taxpayers whose aggregate unpaid liabilities, i.e. tax, interest and penalties, amount to $25,000 or less. For those taxpayers that have not applied for amnesty in the prior amnesty period in 2002 and who have such an outstanding liability, payment of the full outstanding balance may be made in installments so long as a down payment of at least twenty percent (20%) of the portion of the liability that consists of tax and interest is paid along with the filing of the Request for Extended Amnesty and so long as the entire unpaid liability, inclusive of interest that will continue to accrue during the installment periods, is fully paid and is received by the Commissioner by June 16, 2003. Taxpayers that desire to pay such an outstanding liability will be required to submit a written proposal outlining a payment schedule and installment amounts to pay their liability in full by June 16, 2003. That proposal must be filed with the taxpayer's Request for Extended Amnesty. Such proposal should include the number of installments, the amount of each installment, and the due dates for each installment. The Department will respond to that proposal with specific calculations of the amounts of the installment payments necessary to pay off the liability in full by June 16, 2003, and will send the taxpayer a formal installment payment agreement for execution and prompt return to the Department. Failure by the taxpayer to return the installment payment agreement to the Department by February 28, 2003, or by any later date specified by the Department will result in an automatic denial of amnesty.
In the event the taxpayer fails to pay the full outstanding liability on or before June 16, 2003, no payments received by that date will be refunded and all payments received will be applied to the taxpayer's outstanding liability. Amnesty will not be granted to such taxpayers and all penalties will be required to be paid by the taxpayer.
Any taxpayer who enters into an amnesty installment payment agreement with the Commissioner and who fails to timely pay any of the installment payments or who fails to file subsequent tax returns and pay tax when due will have their amnesty installment payment agreement revoked, and immediate payment of the remaining unpaid liability covered by the agreement will be required. Failure to immediately pay the remaining liability due will result in an automatic denial of amnesty for periods covered by the agreement and all penalties will be required to be paid by the taxpayer.
2. Interest Calculator
If a taxpayer cannot precisely determine the total amount of interest due, the taxpayer shall estimate the amount in good faith, and pay the estimated amount with the Request for Extended Amnesty. The Commissioner will notify the taxpayer of any balance due. Any balance determined by the Commissioner to be due must be paid within 15 days from the date of the notice or amnesty will not be granted. For further assistance in the computation of interest, taxpayers should utilize the Interest Calculator located on the Department's Amnesty website at www.mass.gov/dor or refer to the Interest, Penalties, and Application of Payments regulation, 830 CMR 62C.33.1.
3. Due Date
The request for amnesty will be regarded as timely if the Request for Extended Amnesty, along with all properly and accurately completed return(s) and the required payment(s) and, if applicable, any installment payment agreement proposal, are received by the appropriate office of the Department of Revenue as designated on the Request for Extended Amnesty by 5:00 p.m. Eastern Standard Time, on or before February 28, 2003. In addition, if an application is delivered by U.S. mail (or a recognized commercial delivery service) to the appropriate office after February 28, 2003, the request for amnesty will be considered timely if the date of the U.S. postmark (or other substantiating date mark) is not later than February 28, 2003.
A. Penalty Amnesty
If a taxpayer qualifies for amnesty, the Commissioner will waive all penalties which could be assessed for the failure of the taxpayer:
1. to timely file any proper return for any tax types and for any tax periods under G.L. c. 62C, §§ 30, 33, 34;
2. to file proper returns which report the full amount of the taxpayer's liability for any tax types and for any tax periods under G.L. c. 62C, § 28;
3. to timely pay any tax liability under G.L. c. 62C, §§ 33, 35 and/or G.L. c. 62B, § 7; or
4. to pay the proper amount of any required estimated payment toward a tax liability under G.L. c. 62B, § 14, G.L. c. 62C, § 45A, and/or G.L. c. 63B, § 3.
For Annual Filers, the above penalties will be waived for taxable years beginning before January 1, 2001. For Other Filers, the Commissioner will waive these same penalties for taxable periods ending on or before August 31, 2002. In either case, interest cannot be waived.
B. Criminal Investigation and Prosecution
If a taxpayer is granted amnesty by the Commissioner, the Commissioner will not initiate criminal investigation of that taxpayer nor refer the taxpayer's case to the Department of the Attorney General or to the Massachusetts District Attorneys for criminal prosecution for the tax and tax period(s) covered by the grant of amnesty.
Any tax return filed under the Extended Amnesty Program is subject to verification and assessment as provided by statute. G.L. c. 62C, § 26(b). If the taxpayer files a false or fraudulent or otherwise improper tax return or attempts in any manner to defeat or evade a tax under the Extended Amnesty Program, the Commissioner may rescind the grant of amnesty and subject the taxpayer to applicable civil penalties and criminal prosecution. If a taxpayer's request for amnesty is denied, all payments and returns submitted to the Commissioner will be considered to be voluntary and payments will not be refunded. Any such payments will be applied to the taxpayer's tax account(s) in accordance with the provisions of 830 CMR 62C.33.1.
Participation in the Extended Amnesty Program and payment of the tax and interest does not constitute a forfeiture of statutory rights of appeal or an admission of liability for the assessment.
No return or document filed with the Commissioner under the Extended Amnesty Program will be subject to disclosure except as may be permitted in G.L. c. 62C, § 21 and § 22.
Request For Extended Amnesty forms, information and related returns are available on the Department's website at www.mass.gov/dor or by calling the Department's Taxpayer Service Division at (617) 887-6367 or toll free in state at 1-800-392-6089. Request for Extended Amnesty forms and other information can also be obtained through the Department's Fax on Demand system. Please call (617) 887-1900 from the handset on your fax machine for a complete menu of available documents. To call for a Request for Extended Amnesty application, the retrieval number is 425.
Commissioner of Revenue
December 31, 2002