Update on Massachusetts Tax Amnesty Program

As expected, on July 13, 2014, the Massachusetts Tax Amnesty Program (discussed HERE) was signed into law by Governor Deval Patrick, and on August 28th the Massachusetts Department of Revenue (the “DOR”) issued a corresponding Technical Information Release and Frequently Asked Questions providing details on the program.

The program will be run in a manner that is similar to past programs. It is a two-month amnesty program running from September through October 2014 “designed to encourage the payment of delinquent taxes by individuals and businesses. [1] The program is available for taxpayers who have a tax assessment that is on the state’s books as of July 1, 2014. Under the program, if a taxpayer pays such tax and any interest attributed to the late payment by October 31, 2014, then the DOR will waive any associated late payment penalties.

One unexpected difference from past programs is that the current program allows individuals with existing personal income tax liabilities, use tax liabilities, personal boat/recreational vehicle sales tax liabilities, and certain cigarette excise tax liabilities to also participate in the program. Like past programs, the current program is also available to business taxpayers with outstanding sale/use taxes, meals taxes, withholding income, and other business level excise taxes. The program is not available for businesses with outstanding income taxes.

The program is also available to taxpayers who have entered into a payment agreement or have an appeal pending with the DOR relating to any of the taxes eligible for the program. However, taxpayers who have already paid their outstanding tax and interest obligations and only have penalties outstanding are not eligible to participate, as well as taxpayers who have signed settlement agreements or who are the subject of a tax-related criminal investigation or prosecution.

In early September the DOR sent out approximately 300,000 tax amnesty notices to those taxpayers eligible to participate in the program. If you believe you are eligible to participate but have not received a notice, you should contact us immediately and we will work with the DOR to confirm your eligibility for the program. If the tax and interest obligations are not paid by October 31, 2014, the DOR will no longer waive any associated penalties.

This is a good opportunity for taxpayers with outstanding tax bills to bring their accounts up to date without having to pay any penalties. If you participate in this program you will not be eligible to participate in any future Massachusetts tax amnesty programs for 10 years.

If you received a Tax Amnesty Notice and would like help in understanding your options, or if you have other Massachusetts tax issues, please contact Russell J. Stein.