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Technical Information Release

Technical Information Release TIR 13-3: One-Time Limited Extension of Time to File Application for Manufacturing Classification for Certain S Corporations with One or More QSubs

Date: 02/07/2013
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Corporate/Personal Income Tax

Directive 12-5 announced a new procedure for corporations that seek to be included on the Annual List of Corporations (the “Corporations List”), which is the list that assists the Department of Revenue in making determinations as to corporations that are entitled to local property tax benefits.  That Directive also described the rules that apply to S corporations that own one or more Qualified Subchapter S Subsidiaries (“Qsubs”) where either the S corporation or one or more of the Qsubs were referenced on the 2012 Corporations List as manufacturing corporations (i.e., S corporations or Qsubs that were previously classified by the Department as manufacturing corporations).  See DD 12-5, footnote 3.  In short, as explained in that Directive,  S Corporations with one or more Qsubs in these circumstances are likely to have to file or re-file for manufacturing classification for tax year 2013 in the manner described in that Directive if they want to continue to receive the property tax benefits that accrue to classified manufacturing corporations.[1]  This requirement is in addition to the requirement that such entities (both S corporations and Qsubs) must register as stated by Directive 12-5 to ensure that they are included on the Corporations List.

The procedure for filing for manufacturing classification is set for in 830 CMR 58.2.1.  That provision provides, inter alia, that:

A corporation must file its application prior to or during January of the calendar year for which it seeks manufacturing corporation classification.  For these purposes, the application will be treated as timely filed if it is actually received by or is mailed to the Commissioner on or before January 31 of such year.

830 CMR 58.2.1(7)(b).

The January 31st regulatory deadline for seeking manufacturing classification has passed.  However, because Directive 12-5 is recent, and the requirements outlined in such Directive that may require S corporations that own one or more Qsubs to file or re-file for manufacturing classification potentially affect a significant number of taxpayers, the Department is offering a one-time extension with respect to that January 31st deadline to a limited group of affected S corporations with one or more Qsubs.  Pursuant to this extended deadline the application for manufacturing classification of any S corporation that owns one or more Qsubs will be treated as timely filed if it is actually received by or is mailed with proper postmark affixed to the Commissioner on or before March 1, 2013, provided that either the S corporation or one or more of its Qsubs was classified as a manufacturing corporation for 2012.   

An application for manufacturing classification is made on Form 355Q.  Because under current Massachusetts law, an S corporation that owns one or more Qsubs is treated as a single entity, the Form 355Q must be submitted by the S corporation parent, but must also identify each of the S corporation’s Qsubs.  In particular, the Form 355Q must reference the name and federal identification number of each QSub, and must be completed with reference to the combined activities and attributes of the S corporation and each of its QSubs.

If manufacturing classification is granted to an S corporation, such S corporation and each of its QSubs will be listed as manufacturing corporations on the Annual List, and therefore will become eligible for local property tax exemptions available to manufacturing corporations (assuming that the entities otherwise comply with the registration requirement set forth in DD 12-5).  If manufacturing classification is not granted by the Department to an S corporation, then neither that corporation nor any of the corporation’s Qsubs will be identified as a manufacturing corporation on the Annual List.[2]


/s/Amy Pitter
Amy Pitter
Commissioner of Revenue



February 7, 2013

TIR 13-3

[1]  In general, the new requirement is a result of recent law changes under which Massachusetts no longer separately recognizes a Qsub for corporation excise tax purposes; rather, for corporation excise tax purposes the assets, liabilities, activities, and other attributes of a Qsub are treated as being those of its parent S corporation. Therefore, where an S corporation owns one or more Qsubs, neither the S corporation nor any one of the Qsubs can be classified as a manufacturing corporation on a stand-alone basis.  Instead, only the S corporation may be classified as a manufacturing corporation, and only if it so qualifies when considering its assets, activities, and other attributes in combination with those of any Qsubs.  See DD 12-5, footnote 3.

[2]  However, the S corporation can appeal an adverse determination by the Department.  See 830 CMR 58.2.1(10).

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