Technical Information Release  TIR 16-13: Changes to the Amended Return Process Expanded to Most Tax Types

Date:	12/02/2016
Referenced Sources:	Massachusetts General Laws

Introduction:  Effective December 5, 2016, the changes announced by the Department of Revenue (DOR) in Technical Information Release (TIR) 15-13 in conjunction with the implementation of the Department of Revenue’s (DOR) new integrated tax system, MassTaxConnect (MTC), will be extended to most other tax types, including personal income, personal use, estate, and fiduciary income taxes. [1] MTC will allow taxpayers to access their accounts, make payments, file applications for abatement, and perform many other functions online.[2] This TIR supersedes TIR 15-13.

This TIR discusses the following:

a) the processes for filing amended returns and applications for abatement after December 5, 2016, that will apply to all taxpayers.

b) how a taxpayer’s rights will remain protected once the new processes are in place, including the new consent process for extending the time to act on an amended return treated as an application for abatement.

I.  Process for Amending Returns

As of December 5, 2016, if after filing a return for any 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 for most taxpayers to increase previously self-assessed tax, to decrease previously self-assessed tax, to report an increase in self-assessed tax resulting from a federal change, to report a decrease in self-assessed 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. [3] The Form CA-6 Application for Abatement/Amended Return will no longer be used for this (or any) purpose.[4]

Most taxpayers will be able to amend their returns electronically on MTC. However, personal income taxpayers, corporations filing a combined report and certain other C and S corporations may need to use a paper form because MTC and/or third-party software providers may not support electronic amended return filings. Such taxpayers filing amended returns on paper will manually complete the same tax form as used for the original or prior amended return and check the box indicating whether the return is either an amended return or a federal/state change (as applicable). Most taxpayers of business tax types will continue to use MTC or other electronic filing options to file an amended return as explained in TIR 15-13.

Regardless of the manner of filing, an amended return, in general, will be processed as an amended self-assessment under G.L. c. 62C, subject to potential DOR audit review. See 830 CMR 62C.26.2. 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 for abatements of tax as applicable in G.L. c. 62C, §§ 30 (federal change), 30A (state change) and/or 37 (for abatement generally) in order to be processed. [5]  Any overpayments and refunds resulting from an amended return are subject to applicable statutory limitations, including those contained in G.L. c. 62C, §§ 30, 30A, 36, 37, and 40, and 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 abatement and appeal rights of the taxpayer and to allow DOR an adequate opportunity to review the changes. See Section IV of this TIR below.

II.  Amended Returns for All Tax Types Remain Subject to DOR Review and Potential Adjustment

DOR will process the great majority of amended returns in the same general manner as it does an original return. 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 time limitations, including those contained in G.L. c. 62C, §§ 26, 29, 30, 30A, 36, 37, and 40. In the event of an erroneous refund, the provisions of G.L. c. 62C, § 36A will apply.

If the Commissioner later concludes that the proper tax due is higher than the amount reported on the amended return, or otherwise, the Commissioner may issue a Notice of Intent to Assess [6] to the taxpayer where required by G.L. c. 62C, § 26(b).[7] If a Notice of Intent to Assess is issued, pursuant to G.L. c. 62C, § 26(b), the taxpayer will then have a statutory 30 day period to request a pre-assessment conference with DOR. Issuance of the Notice of Intent to Assess will serve to protect a taxpayer’s statutory and administrative rights for administrative review and appeal.[8] Subject to such administrative review, the taxpayer may subsequently be issued a Notice of Assessment representing a deficiency assessment by the Commissioner.  The deficiency assessment will offer an opportunity for further administrative review and appeal pursuant to G.L. c. 62C, § 37.
 

III.  Process for Submitting an Abatement Application Related to an Additional Tax or a Penalty Assessed by DOR for Tax Types on MTC

Taxpayers seeking to obtain an abatement of a deficiency assessment or a penalty assessment issued by DOR should use MTC by logging on to their MTC account and following the instructions provided for disputing a tax or penalty assessed by DOR.[9] Any taxpayers using a paper form may seek an abatement of a tax or penalty assessed by DOR by submitting DOR’s new Form ABT, Application for Abatement, but disputes filed through MTC will be processed much more quickly and thus that is the preferred route. At this time, taxpayers seeking to appeal a Responsible Persons determination or a state-collected motor vehicle excise assessment, a purchaser filing a refund claim on behalf of a vendor, or tax types not yet supported on MTC (see footnote 1) must file a paper Form ABT.

As noted above, taxpayers will no longer use Form CA-6, “Application for Abatement/Amended Return,” for any purpose.

IV.  The Commissioner May Deem an Amended Return to be an Application for Abatement

An amended return showing a reduction in self‑assessed tax generally will not be treated by DOR as an application for abatement. Nevertheless, in certain instances the Commissioner may deem an amended return showing a reduction of tax to be an application for abatement to protect the abatement and appeal rights of the taxpayer and to allow DOR an adequate opportunity to review the changes, as described in paragraphs A and B, below. For example, a common situation where DOR would determine to treat an amended return as an application for abatement would be when an amended return is received shortly before the expiration of the period of limitations for assessment of tax with regard to the period being amended.

A.  Process where the Commissioner Deems an Amended Return to be an Application for Abatement

Where DOR receives an amended return and deems the amended return to be an abatement application, DOR will provide the taxpayer with notice of such treatment. 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 and, for the protection of the taxpayer’s rights, the taxpayer will be deemed to have consented to extend the statute of limitations contained in G.L. c. 58A, § 6 when the taxpayer filed its amended return.  A taxpayer may withdraw such consent at any time by contacting the DOR in writing.[10] See TIR 16-11. 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, in responding to the notice from DOR, to request a hearing and/or other dispute resolution options.

B.  Process where the Amended Return is Deemed as an Application for Abatement Due to the Expiration of the Statute of Limitation on Abatement Claims

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 take action upon[11] a properly filed amended return that seeks a reduction in self-assessed tax before the time at which the statute of limitations for abatement claims would otherwise expire under G.L. c. 62C, §§ 30, 30A and/or 37, the Commissioner will deem such amended return to be an application for abatement in the amount of reduction sought. To protect the taxpayer’s administrative appeal rights, the taxpayer will be deemed to have consented to extend the statute of limitations contained in G.L. c. 58A, § 6 when the taxpayer filed its amended return.  A taxpayer may withdraw such consent at any time by contacting the DOR in writing (see footnote 10).  See TIR 16-11. 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.[12] The intent of this treatment is to protect a taxpayer’s abatement rights in the event of a processing error by DOR.[13] If DOR fails to act upon an amended return such that this Section IV.B. applies, the taxpayer should contact DOR as soon as possible to request a hearing and/or other dispute resolution options.

V.  Regulatory Changes Related to the New Processes

The Commissioner intends to adopt regulatory changes to reflect the new processes being implemented.
 

/s/Michael J. Heffernan
Michael J. Heffernan
Commissioner of Revenue

 

MJH:RHF:me

December 2, 2016

TIR 16-13

[1] Abandoned Bottle Deposits, Care & Custody, Controlled Substances, Deeds Excise, Inheritance, UST and Oil Spill Fee will not be supported on MTC at this time. These taxpayers will continue to use an application for abatement to amend returns and/or dispute a tax assessment (see Section III below).

[2] Personal income taxpayers will not be able to electronically file original returns or amended returns directly through MTC.  However, there are free electronic filing options for original returns currently available to qualifying taxpayers and more choices are expected as a result of Massachusetts joining the Free File Alliance, a nonprofit partnership between tax software companies, the IRS, and the States to help taxpayers e-file their tax returns for free. These electronic options may not be available for amended returns.

[3] A purchaser seeking an abatement of sales/use tax under a power of attorney on behalf of a vendor should refer to TIR 16-12.

[4] Taxpayers will still file applications for abatement to dispute deficiency and penalty assessments and for certain other disputes (see Section III below).

[5] An amended return showing a reduction in tax liability will not be accepted after the applicable statute of limitations for filing an abatement application has expired except to the extent of the Commissioner’s determination pursuant to G.L. c. 62C, § 36A.

[6] Depending on the circumstances, the Commissioner may also issue a Notice of Correction under G.L. c. 62C, § 26(c) or, in the case of a fraudulent return or a jeopardy assessment, may not be required to issue a Notice of Intent to Assess (see G.L. c. 62C, §§ 26(d) and 29).

[7] In certain instances (e.g., where time does not permit adequate opportunity for review) the Commissioner may instead deem the amended return to be an application for abatement (see Section IV). In either event, the taxpayer’s administrative appeal rights will be protected.

[8] Currently DOR does not have an electronic process for a request for pre-assessment administrative review of a proposed assessment stated on a Notice of Intent Assess. A taxpayer who filed electronically should follow the instructions stated on the Notice of Intent to Asses form to pursue any pre-assessment conference with DOR. 

[9] Tax assessed by DOR would be any amount that was not self-assessed by the taxpayer, such as amounts assessed pursuant to an audit and reflected on a Notice of Assessment.

[10] If a taxpayer withdraws consent in writing under G.L. c. 58A, § 6, the abatement application is then deemed denied upon the later of the consent withdrawal or the expiration of the initial six-month period. Once an abatement application is deemed denied the taxpayer has six months to file an appeal with the ATB to challenge the abatement denial. For further information on how to withdraw consent please go to www.mass.gov/dor/appeals-info.

[11] For purposes of this section IV.B., the Commissioner “takes action upon” an amended return when the taxpayer’s self-assessment is reduced on the Commissioner’s books and records and/or a corresponding refund is issued to the taxpayer, when the Commissioner issues an Notice of Intent to Assess, Notice of Correction, Notice of Assessment, or any other notice related to the reduction sought required under G.L. c. 62C; when the Commissioner issues a letter informing the taxpayer that its amended return has been deemed an abatement application; when the Commissioner issues a notice of abatement determination related to the reduction sought on the amended return; or the Commissioner issues any other notice indicating resolution of the amended return.   

[12] This is a change from TIR 15-13. Since consent is now deemed to be granted at the time of the filing of the amended return, the date of the filing of the amended return will be treated as the date of filing of the application for abatement to be consistent with paragraph A in Section IV above.

[13] To help avoid this outcome, if a taxpayer has filed an amended return and the changes have not been reflected on their MTC account and/or the taxpayer has not received notice from DOR within a few months, the taxpayer should contact DOR.