Technical Information Release  TIR 94-9: Voluntary Dissolution of Corporations: DOR Guidelines for Obtaining Certificates of Good Standing for Dissolution Purposes after Repeal of Voluntary Dissolutions Regulation 830 CMR 62C.32.1

Date:	10/12/1994
Referenced Sources:	Massachusetts General Laws

Tax Administration

I. Introduction

Legislation enacted by St. 1991, c. 529, effective March 19, 1992, amended Chapter 156B, § 100(d) of the General Laws, by removing the requirement that a voluntarily dissolving corporation obtain a Certificate of Good Standing for Dissolution Purposes ("Certificate") from the Commissioner of Revenue in order to be dissolved by the Secretary of State. In Technical Information Release 92-4, the Commissioner indicated that although such certificates are no longer required as a prerequisite for dissolution, the Commissioner would continue to issue such certificates to any voluntarily dissolving corporation wishing to obtain such certificates. The Commissioner further indicated that corporations must follow the procedures set forth in the Voluntary Dissolutions regulation, 830 CMR 62C.32.1.
The Commissioner has repealed this regulation, effective November 4, 1994. The purpose of this Technical Information Release is to explain the procedures that apply to a dissolving corporation wishing to obtain a Certificate of Good Standing for Dissolution Purposes after the repeal of the Voluntary Dissolution regulation.

II. Procedures

Although Certificates of Good Standing for Dissolution Purposes are no longer required in order for a corporation to be dissolved by the Secretary of State, corporations nonetheless may wish to obtain them for various business reasons. The Commissioner will continue to issue such certificates to voluntarily dissolving corporations that follow the procedures set forth in this Technical Information Release. Regardless of whether voluntarily dissolving corporations request a Certificate of Good Standing for Dissolution Purposes, such corporations are still required to notify the Commissioner that dissolution of the Corporation has been duly authorized, within 30 days of the date of such authorization. See G.L. c. 156B, § 100(b), and section 1 of this Technical Information Release, below. To obtain such a certificate, voluntarily dissolving corporations must complete the following steps:

1. Give Notice of its Authorization of Dissolution to the Commissioner;
2. Pay all taxes that have been assessed or deemed assessed against it; and,
3. Provide for any unassessed corporate excise liabilities.

1. Notice of Authorization of Dissolution ("Notice")

Within 30 days of the vote authorizing its voluntary dissolution, a corporation must notify the Commissioner in writing of its action. See G.L. c. 156B, § 100(b). Notice may be given on a form provided by the Commissioner, or it may be in the form of a letter on corporate letterhead. The Notice must be dated and certified by the president, vice-president, treasurer, or clerk of the corporation under penalties of perjury, and must include the following information:

a. the corporation's federal and Massachusetts identification numbers;

b. each and every name under which the corporation is conducting, or has conducted, business, and the location of its principal office in Massachusetts;

c. the name and address of the parent corporation of an affiliated group of which the corporation is, or in the last 3 years, has been a member, if any;

d. a list of taxes for which the corporation is, or has been required to file returns or make payments, including the amount of the corporate excise liability for each of the last three years, determined without the deduction of any credits;

e. a statement that the corporation has or has not received a Notice of Intent to Assess under M.G.L. c. 62C, s. 26(b) (NIA) within the last three years;

f. information as to:

(i) the date of incorporation;
(ii) the close of the corporation's usual taxable year;
(iii) whether or not the final federal income tax return has been filed, and if so, the period covered;
(iv) the date upon which the corporation ceased or plans to cease doing business;
(v) the date upon which it completed or plans to complete its liquidation; and,
(vi) the proposed effective date of dissolution.

g. a statement that the corporation has authorized its voluntary dissolution in accordance with M.G.L. c. 156B, s. 100(a); and

h. a properly signed and dated copy of the vote authorizing the corporation's voluntary dissolution.

Notice must be accompanied by a $10.00 filing fee, or in the amount determined annually by the Secretary of Administration and Finance. Notice is filed on the date when a Notice complying with the requirements of this Technical Information Release is mailed to the Commissioner.

2. Payment of taxes

In addition to the other requirements imposed by this Technical Information Release, a corporation must pay all taxes that have been assessed or deemed assessed against it under M.G.L. c. 62C. A corporation must file all tax returns that are or became due under M.G.L. c. 62C during any period of its corporate existence, and must pay all amounts due thereon. A corporation must also pay any amounts that the Commissioner assesses or has assessed against it under M.G.L. c. 62C before the issuance of the Certificate. The returns and payments required by this paragraph include a corporate excise return and payment for the corporation's final taxable year, and a final return and payment for any other tax for which the corporation is liable. The requirements of this section do not apply, however, to any tax for which the period of limitation for assessment, M.G.L. c. 62C, ss. 26-31, or for collection, M.G.L. c. 62C, s. 65, has expired.

In order to facilitate the issuance of the Certificate, a corporation that has authorized its voluntary dissolution should file any returns or payments still outstanding together with its Notice, if possible. The payment must be in the form of a check or money order, payable to "Commonwealth of Massachusetts."

3. Providing for unassessed corporate excise liabilities

In addition to the other requirements imposed by this Technical Information Release, a corporation must provide for any unassessed corporate excise liabilities in order reasonably to protect the revenue interests of the Commonwealth following the corporation's liquidation and dissolution.

a. Posting security. A corporation may provide for any unassessed corporate excise liability by posting security in the form of a surety bond, a savings account in a bank or trust company in Massachusetts that is fully assignable, or an obligation of the United States or the Commonwealth that matures not more than five years from the date of the dissolution.

(i) Amount. A corporation must provide security in an amount equal to its highest corporate excise liability in its last three taxable years determined without the deduction of any credits.

(ii) Duration. A corporation must provide security for one year after its effective date of dissolution.

b. Assumption of liabilities. In lieu of posting security, the directors who vote to dissolve, and the president and the treasurer of the corporation, or a successor or affiliate corporation, may assume liability for any unassessed corporate excise liabilities of the corporation, subject to the conditions and limitations set forth below.

(i) Limitation on liability. The liability assumed by the directors and officers, or a successor or affiliated corporation, shall not exceed an amount equal to the lesser of either: the corporation's highest corporate excise liability in its last three taxable years determined without the deduction of any credits; or the aggregate value of the liquidating distributions made by the corporation to its shareholders.

(ii) Duration. The Commissioner must commence enforcement of an assumption of liability agreement within one year of the effective date of dissolution.

(iii) Defenses. A person assuming liability may raise any defense that the corporation could have raised concerning the validity or amount of any liabilities the Commissioner seeks to recover under the agreement.

(iv) Alternatives. The corporation may request in writing that the Commissioner waive part of the requirement that the directors who vote to dissolve the corporation and the president and the treasurer must sign the assumption of liability agreement for unassessed corporate excise liabilities to permit fewer persons to assume the liabilities. The request should explain any undue hardship in obtaining all of the required signatures and should demonstrate that adequate security for the unassessed corporate excise liabilities can be otherwise provided.

c. Security not necessary. Neither the security provided, nor the assumption of liability provided pursuant to this Technical Information Release shall be required if the corporation's average tax liability for the last three taxable years is $5,000 or less, determined without the deduction of any credits.

d. Additional security. If a corporation has received a Notice of Intent to Assess (NIA) under M.G.L. c. 62C, s. 26(b), the amount of security which a corporation must provide for under this Technical Information Release must be increased by the amount of the proposed deficiency in the NIA. The duration of the security posted or the assumption of liability under this Technical Information Release shall extend until the limitation period for the assessment or such other date agreed upon in writing by the Commissioner and the corporation.

4. Effect of Certificate

A Certificate of Good Standing for Dissolution Purposes certifies that a corporation has paid all taxes that have been assessed or deemed to be assessed against it, and that it has provided for any unassessed corporate excise liabilities, in accordance with the requirements of this Technical Information Release. No other certificate of good standing issued by the Commissioner or the Secretary of State may be used to satisfy the requirements of this Technical Information Release.

a. Continued corporate liability. A Certificate does not relieve a corporation from liability for any tax payable by it to the Commonwealth under M.G.L. c. 62C.

b. Commissioner's authority. A Certificate does not waive, suspend or limit the Commissioner's authority under M.G.L.

c. 62C or any other provision of law, including, but not limited to, the authority to assess additional amounts against the corporation, pursuant to M.G.L. c. 62C, the authority to determine the liability of responsible persons, pursuant to M.G.L. c. 62C, s. 31A, and 830 CMR 62C.31A.1, and the authority to seek criminal prosecutions.

5. Final Corporate Excise Return and Payment

a. Final federal taxable year closing on or before dissolution. If a corporation seeks to effect voluntary dissolution on or after the close of its final taxable year for federal income tax purposes, its final taxable year for the purpose of the corporate excise shall close on the later of: the close of its final federal taxable year; or the date of the shareholder's vote to authorize voluntary dissolution.

b. Liability for corporate excise. If the shareholder vote to authorize voluntary dissolution is after the close of the final federal taxable year and is within a reasonable time following the start of a successive taxable year for the purpose of the corporate excise, the corporation is not liable for the minimum excise on account of that short successive taxable year unless it continues to do business, as discussed below. For purposes of this Technical Information Release, a "reasonable time" means the period extending until the fifteenth day of the third full month following a measuring event, such as the close of a corporation's previous taxable year.

c. Final federal taxable year closing after dissolution. If a corporation seeks to effect its voluntary dissolution before it has completed its liquidation and thereby closed its final taxable year for federal income tax purposes, its final taxable year for corporate excise purposes shall close upon its effective date of dissolution.

(i) Tentative return and estimated payment required. A corporation whose final federal taxable year closes after its effective date of voluntary dissolution must file a tentative return for its final taxable year for the purposes of the corporate excise, and pay the amount of tax reasonably estimated to be due, together with its Notice. The Commissioner shall not issue a Certificate to such a corporation unless and until this tentative return and estimated payment are received. The corporation must file its final return in accordance with the provisions of this Technical Information Release.

(ii) Liability for taxes following effective date of dissolution. Depending on the facts and circumstances, the successor entity, if any, or the shareholder of the dissolved corporation, may be required to pay the taxes owed by the corporation following the effective date of dissolution.

d. Continuing to do business. If a corporation continues to engage in business for which it was organized following its effective date of dissolution, it will continue to be liable for the corporate excise on account of each successive taxable year until it ceases to do business.

e. Final taxable year when no federal return is required. If a corporation is not required to make a return to the federal government, its final taxable year for purposes of the corporate excise shall close upon the date the shareholders vote to authorize voluntary dissolution.

f. Due date of returns and payments. For purposes of computing interest and penalties, the due date of a corporation's corporate excise return for its final taxable year and payment of any tax due is on or before the fifteenth day of the third full month following the close of its final taxable year.

(i) Filing Date When Corporation Seeks Certificate. In order to facilitate issuance of its Certificate, the corporation should file its return and payment together with its Notice, if possible. Except as otherwise provided in this Technical Information Release the Commissioner shall not issue a Certificate unless and until the final return and payment are received.

g. Extension of time to file. A corporation may request an extension of time to file its final corporate excise return. The request must be in writing and must demonstrate substantial hardship to the corporation if the request is not granted. Substantial hardship must be due to events outside the control of the corporation and involve uncertainty in determining the total tax due of the greater of $5,000 or 10% of the tax computed on the tentative return.

(i) Tentative return. A request for extension must be accompanied by a tentative return for the final taxable year and by payment of the full amount of tax reasonably estimated to be due.

(ii) Filing. A corporation should file its request, return and payment together with its Notice.

(iii) Duration. An extension of time to file a final return is granted for a period of six months.

(iv) Interest and Penalties. Any portion of the tax which is not paid on or before the due date of the final return, determined without regard to any extension of time for filing the return is subject to interest from the original due date to the date of payment. Failure to pay fifty percent of the tax due with respect to the final return on or before the original due date of the final return shall void the extension of time, and the return shall be subject to penalties as a late return.

(v) Issuance of Certificate. If an extension of time to file is granted, the Commissioner shall issue a Certificate on the basis of the tentative return and estimated payment filed by the corporation, provided that the corporation has satisfied the other requirements for a Certificate set forth in this Technical Information Release.

h. Abandoning Articles of Dissolution. If a corporation abandons its Articles of Dissolution following the issuance of its Certificate, it shall continue to be liable for the corporate excise on account of each successive taxable year.

6. Final Returns and Payment for Other Taxes

A corporation must submit a final return and payment for any other tax for which it is liable under M.G.L. c. 62C. These other taxes include, but are not limited to the withholding, meals, room occupancy, and sales and use taxes. If a corporation is not, or has not been liable for one or more of these other taxes, it must submit an affidavit so stating. Sample affidavits are available from the Department of Revenue, Compliance Division, upon request.

/s/Mitchell Adams
Mitchell Adams
Commissioner of Revenue

October 12, 1994

TIR 94-9