Technical Information Release  TIR 06-21: Revised Rules for Automatic Extensions of Time to File Tax Returns For Certain Taxpayers

Date:	12/07/2006
Organization:	Massachusetts Department of Revenue
Referenced Sources:	Massachusetts General Laws

Tax Administration

I. Introduction

This Technical Information Release (TIR) explains a change of the rules of the Department of Revenue with regard to requests for extensions of time to file tax returns for certain taxpayers, beginning with tax year 2006 returns. These new rules are being announced in an effort to reduce unnecessary paperwork, for the mutual benefit of taxpayers, practitioners and the Department. While extensions must still be requested in many situations, as further described in this TIR, nevertheless the Department estimates that the changes currently being announced will eliminate the need for in excess of 100,000 extension requests from taxpayers who are in clear refund situations or are filing zero-tax returns. The Department hopes to broaden the situations in which extension requests are eliminated as enhancements to its computer systems permit. Any such changes would be announced in a future TIR.

II. Statutory Authority

Pursuant to G.L. c. 62C, § 19, the Commissioner of Revenue is authorized to grant a taxpayer, for good cause, a reasonable extension of time to file its tax return, provided that on or before the due date for payment of the tax, the taxpayer files a tentative return in such form as the Commissioner may require and pays the tax reasonably estimated to be due.

For most taxpayers, the Commissioner had previously required that to receive an extension of time to file a return, the taxpayer had to submit a formal request using a form designated by tax type. [1] In accordance with the rules set forth in this TIR, the Commissioner will grant certain taxpayers an automatic six month extension of time to file a return, without requiring the submission of an application for such extension.

III. New Rules

Beginning with returns due for tax years ending on or after December 31, 2006, the Commissioner will grant certain individuals, fiduciaries, partnerships, and domestic and foreign corporations [2] an automatic six month extension of time to file a tax return, without the need for application by such taxpayer, provided the following criteria are met:

1. the taxpayer owes no tax with the return (including cases where the taxpayer is due a refund); and
2. 100% of the tax due for the taxable year has been paid, through one of the means specifically described below, by the original due date for filing the return.

For purposes of applying the second of these criteria, in calculating whether 100% of the tax due for the taxable year has been paid by the original tax filing due date, the Commissioner will only consider the following, as relevant:

1. taxes paid through withholding;
2. timely estimated payments of tax;
3. credits from the current year return; and
4. credits forwarded from the previous tax period, but limited only to a refund from the prior tax year applied to the next year's tax liability.

Any other payments, such as late estimated payments, payments made with vouchers, and payments made with the actual filing of the return in question will not be taken into account for purposes of calculating whether 100% of the tax due has been paid by the original tax filing due date.

Returns affected by these new rules are those reporting tax imposed under G.L. c. 62 and G.L. c. 63.

The six month extension will run from the last date for timely filing the required return, as specified under G.L. c. 62C. This extension does not extend the due date for payment of any tax due.

IV. Administrative Matters

Taxpayers that are unsure about whether they meet the criteria outlined in this TIR should submit an application for an extension of time to file a return either electronically, or by filing Form M-4868 (individuals), Form M-8736 (fiduciaries, partnerships and corporate trusts), or Form 355-7004 (corporations) when permitted under existing rules. Taxpayers for whom the Commissioner has previously announced electronic filing requirements for purposes of seeking an extension of time to file their return must continue to follow those requirements. See TIR 04-30 (including, among other filers, certain corporations and personal income tax filers making no payments with their extension application).

Any taxpayer that does not meet the criteria for an automatic extension without application as outlined in this TIR and does not submit an application for an extension of time to file either electronically or by filing Form M-4868 (or other designated forms) will be subject to penalties for late filing and late payment. G.L. c. 62C, § 33. In addition, interest accrues from the original due date for filing a return on all amounts not paid by the due date, and on any amount assessed as a penalty. G.L. c. 62C, § 40.

 

/s/Alan LeBovidge

Alan LeBovidge

Commissioner of Revenue

 

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December 7, 2006

TIR 06-21

[1] For personal income tax, see Form M-4868; for fiduciaries, partnerships and corporate trusts, see Form M-8736; for corporations, see Form 355-7004.

[2] This TIR does not apply to financial institutions, insurance companies, utility companies, urban redevelopment companies, or any other corporations required to file Form 355-7004 Misc. to request an extension of time to file their tax return.