Technical Information Release  TIR 04-13: Change to Final Determination for Purposes of "Federal Change" Provision in G.L. c. 62C, § 30

Date:	05/14/2004
Referenced Sources:	Massachusetts General Laws

Tax Administration

This Technical Information Release announces an amendment to the Massachusetts federal change provision, G.L. c. 62C, § 30, brought about by recent legislation, St. 2003, c. 143, § 1.

Under G.L. c. 62C, § 30, when the federal taxable income of certain taxpayers is finally determined by the federal government to be different from that originally reported, the "federal change" must be reported to the Massachusetts Department of Revenue. Taxpayers who must report changes are those with incomes taxable under G.L. cc. 62 or 63 (personal income tax or corporate excise, respectively), or with federal taxable estates subject to Massachusetts estate tax under G.L. c. 65C. [1] If as a result of the federal change a taxpayer owes additional tax to Massachusetts, the tax must be paid, with interest, when the federal change is reported. If as a result of a federal change, a taxpayer believes that a lesser Massachusetts tax is due, an abatement application may be filed with the Department of Revenue within one year from the date of notice of a final determination of change by the Internal Revenue Service. G.L. c. 62C, § 30.

For purposes of G.L. c. 62C, § 30, as amended by St. 2003, c. 143, § 1, a change in federal taxable income [2] resulting from a closing agreement, [3] an offer in compromise [4] or any similar agreement constitutes a final determination of a change by the federal government. An agreement may constitute a final determination whether or not any audit or other review is complete with respect to issues not addressed in the agreement. Such an agreement need not result from a formal deficiency assessment against the taxpayer. Taxpayers must report changes resulting from those agreements to the Department of Revenue. The statutory amendment is applicable to closing agreements, offers in compromise, or similar agreements executed on or after January 1, 2004. [5]

 

/s/ Alan LeBovidge

Alan LeBovidge

Commissioner of Revenue

AL:LEM:lbr

169015

TIR 04-13

May 14, 2004

[1] The required time for reporting such changes varies by tax type. Federal changes pertaining to taxpayers subject to tax under chapter 62 must be reported within one year of receipt of notice of the final determination by the Internal Revenue Service (IRS). Federal changes pertaining to tax under chapter 63 must be reported within three months of receipt of notice of final determination by the IRS. Federal estate tax changes must be reported within two months of receipt of notice of the final determination by the IRS.

[2] A change by the federal government in federal taxable income does not necessarily mean a corresponding change in Massachusetts taxable income.

[3] IRC § 7121.

[4] IRC § 7122.

[5] Prior to the current statutory amendment, DOR Regulation 830 CMR 62C.30.1 already listed closing agreements as an example of a determination by the federal government. Thus closing agreements resulting in a change in federal taxable income executed prior to January 1, 2004 may also be considered final determinations for purposes of G.L. c. 62C, § 30.