I. New Process for Amending Returns for Business Tax Types: Amended returns will generally be processed in same manner as original returns, via an automated process.
Generally, if after filing a return for a business tax type a taxpayer discovers that information was omitted or a mistake was made, the taxpayer should file an amended return to adjust the information reported on the prior return. Filing an amended return will be the appropriate means to increase previously reported tax, to decrease previously reported tax; to report an increase in tax resulting from a federal change, to report a decrease in tax resulting from a federal change, and to make amendments that have no net effect on the tax shown on the return (e.g., amendments that would affect a loss carryover). Taxpayers will no longer use an abatement application to amend a return.
For all taxpayers using MassTaxConnect, a taxpayer seeking to amend its return should log on to MassTaxConnect, adjust the amounts shown on the taxpayer’s prior return, and submit the amended return by following the instructions provided in MassTaxConnect. Taxpayers using a third party software provider will adjust the information using the amended return process specific to the software they are using. Any taxpayer amending a return using a paper form will manually complete the same tax form as used for the original or prior amended return and check the box indicating that the return is an amended return.
An amended return generally will be processed as an amended self-assessment under G.L. c. 62C, subject to potential DOR audit review. This process is similar to the process for amending federal returns. Changes indicated on the amended return will be reflected as adjustments to the taxpayer’s account. An amended return showing an increase in tax constitutes a new self-assessment but the new assessment is limited to the amount of the increase in tax due. An amended return showing a decrease is not a new assessment, as the remaining tax shown as due was already self-assessed on a prior return.
An amended return showing a reduction in tax liability must be filed within the time limits specified in G.L. c. 62C, § 30 and/or §37 (as applicable) in order to be processed. Any reduction in tax liability shown on an amended return is subject to review by the Commissioner within the applicable period of limitations prescribed in G.L. c. 62C. Any overpayments and refunds resulting from an amended return are subject to applicable statutory limitations, including those contained in G.L. c. 62C, §§ 30, 36, 37, and 40, and similarly, refunds are subject to any allowable offset or intercept.
In certain instances an amended return filed pursuant to this new process and showing a reduction of tax may be treated by DOR as an application for abatement to protect the rights of the taxpayer and to allow DOR an adequate opportunity to review the changes. See Section IV of this TIR below.
Taxpayers seeking to file amended returns for non-business tax types will continue at this time to use WebFile for Individuals and/or the Form CA-6 Application for Abatement/Amended Return to adjust any amounts reported on prior returns. However, DOR anticipates that, by the end of 2017, changes similar to those described in this TIR will be extended to these non-business tax types, including personal income taxes and fiduciary income taxes. DOR will provide further notice when such changes become applicable.
II. Amended Returns for Business Tax Types Remain Subject to DOR Review and Potential Adjustment.
DOR will process the great majority of amended returns for business tax types through an automated means and will generally treat the filing of amended returns in the same manner as the filing of original returns. The processing of an amended return by DOR does not indicate approval of the changes reported on the amended return. As with an original return, an amended return may be selected for review by DOR during processing or at a later time. Amended returns where refunds have been issued remain subject to additional review in accordance with statutory limitations, including those contained in G.L. c. 62C, §§ 26, 29, 30, 36, 37, and 40. In the event of an erroneous refund, the provisions of G.L. c. 62C, § 36A will apply.
If the Commissioner concludes that the proper tax due is higher than the amount reported on an amended return, the taxpayer will be issued a Notice of Intent to Assess (NIA) where required by G.L. c. 62C, § 26(b). Pursuant to G.L. c. 62C, § 26(b), the taxpayer will then have a 30 day period to request a pre-assessment conference with DOR. Issuance of the NIA will serve to protect a taxpayer’s statutory and administrative rights for administrative review and appeal. See Section III of this TIR, below.
Taxpayers of business tax types seeking to obtain an abatement of a tax or penalty that has been assessed by DOR should use MassTaxConnect by logging on to their MassTaxConnect account and following the instructions provided for disputing a tax or penalty assessed by DOR. Any taxpayers of business tax types using a paper form may seek an abatement of a tax or penalty assessed by DOR by submitting the new Form ABT, Application for Abatement, but disputes filed through MassTaxConnect will be processed much more quickly and thus that is the preferred route. At this time, taxpayers seeking to appeal a Responsible Persons determination must file a paper Form ABT.
Taxpayers of business tax types will no longer use Form CA-6, Application for Abatement/Amended Return for any reason, including to apply for an abatement of taxes or penalties assessed by DOR. However, for taxpayers of non-business tax types, such as personal income tax, that are not yet available through MassTaxConnect, the Form CA-6 will continue to be the correct paper form for filing an application for abatement of a tax or penalty assessed by DOR, and taxpayers are encouraged to file abatement applications and amended returns online through DOR’s WebFile for Income. DOR will provide further notice when these non-business tax types become available through MassTaxConnect.
IV. The Commissioner May Treat an Amended Return for a Business Tax Type as an Application for Abatement.
In general, an abatement application for a business tax type is a request to reduce an assessed tax pursuant to G.L. c. 62C, §§ 30 and/or 37. As indicated above, however, an amended return showing a reduction in self‑assessed tax generally will not be treated by DOR as an application for abatement that would trigger the abatement process pursuant to G.L. c. 62C, §§ 30 and/or 37. Nevertheless, the Commissioner may choose to treat an amended return showing a reduction of tax as an application for abatement, as described in paragraph A, below. For example, a common situation where DOR would choose to treat an amended return as an application for abatement would be an amended return received shortly before the expiration of the period of limitations for assessment of tax with regard to the period being amended. Additionally, a special rule as described in paragraph B, below, will apply to protect taxpayers in certain cases where the statute of limitations for filing an application for abatement would otherwise run.
A. In cases where the Department receives an amended return and chooses to treat the amended return as an abatement application, the taxpayer will be provided with notice by DOR. The notice will provide instructions, including direction regarding hearing rights, and will ask for a response and any necessary documentation. The taxpayer’s amended return showing a reduction of a prior self-assessment will be treated as an application for abatement in the amount indicated. The self-assessment on the original or a prior return, without adjustment pursuant to this amended return, will remain in effect except to the extent that any amount may thereafter be abated. The date of the filing of the amended return will be treated as the date of filing of the application for abatement. The taxpayer will have the option of responding to the notice from DOR within six months from the date of the filing of the amended return in order to request a hearing and/or to grant consent to the Commissioner to act beyond the six month period contained in G.L. c. 58A, § 6. If the taxpayer does not grant consent and DOR does not issue a notice of abatement determination on the abatement application within six months, the abatement application will be deemed denied pursuant to G.L. c. 58A, § 6.
B. DOR anticipates processing amended returns promptly, in a manner comparable to the processing of original returns. However, in the event that the Commissioner fails to act upon a timely filed amended return that seeks a reduction in self-assessed tax before the time at which the statute of limitations for the filing of an abatement application related to the reduction sought on the amended return would otherwise expire under G.L. c. 62C, §§ 30 and/or 37, the previously filed amended return will be treated by DOR as an application for abatement in the amount indicated. The filing date of such deemed abatement application will be considered to be the last day before the expiration of the statute of limitations for filing an application for abatement under G.L. c. 62C, §§ 30 and/or 37. The intent of this treatment is to protect a taxpayer’s abatement rights in the event of a processing error. If the Department fails to act upon an amended return such that this section IV.B. applies, the taxpayer may contact DOR at any time within six months from the date of the expiration of the statute of limitations to request a hearing and/or to grant the Commissioner consent to act on the deemed abatement application beyond the six month period contained in G.L. c. 58A, § 6. If the taxpayer does not grant such consent and DOR does not issue a notice of abatement determination within six months, the abatement application will be deemed denied pursuant to G.L. c. 58A, § 6. The original self-assessment, without adjustment pursuant to the amended return, will remain in effect.
The Commissioner intends to adopt regulatory changes to reflect the new processes being implemented in connection with the adoption of MassTaxConnect.
/s/Mark E. Nunnelly
Mark E. Nunnelly
Commissioner of Revenue
November 17, 2015