Technical Information Release  TIR 02-14: Amnesty Program

Date:	09/26/2002
Organization:	Massachusetts Department of Revenue
Referenced Sources:	Massachusetts General Laws

Tax Administration

I. Introduction

To encourage the voluntary disclosure and payment of delinquent tax obligations to the Commonwealth, Section 182 of Chapter 184 of the Acts of 2002, specifically authorizes the Commissioner of Revenue to establish a two-month amnesty program. Pursuant to this grant of authority, the Commissioner has established a two-month "Amnesty" period commencing on October 1, 2002 and ending on December 2, 2002. [1]

Under this legislation, if an eligible taxpayer with annual return filing obligations ("Annual filer") files all required returns for all taxable years beginning before January 1, 2001 and pays the full amount of tax and interest due for all such taxable years and properly and timely files a Request for Amnesty, the Commissioner is authorized to waive all unpaid penalties imposed for failure to timely file a return, [2] failure to file a proper return, [3] failure to timely pay a tax liability, [4] and failure to pay the proper amount of any required estimated tax payments [5] for such taxable years. Such annual filer must also file a return and pay the full amount of tax liability due for any taxable year beginning on or after January 1, 2001 whose due date for filing is prior to the start of the Amnesty period.

For eligible taxpayers whose filing responsibilities are for periods other than on an annual basis ("Other filers"), the Commissioner will waive unpaid penalties, as described above, for any such taxpayer who files all required returns and pays the full amount of tax and interest due for all taxable periods ending on or before August 31, 2002, and properly and timely files a Request for Amnesty.

When an eligible taxpayer either: (i) pays the full outstanding balance of tax and interest with respect to previously filed returns or assessments or (ii) files proper and accurate returns and pays the tax and interest due for all periods described above, the Commissioner will forego the assessment of penalties (and only that interest directly attributable to those penalties) as to that taxpayer for those tax periods. St. 2002, c. 184, § 182.

Penalties that have been assessed, or that could be assessed by the Commissioner against a taxpayer for liabilities relating to the following tax types are not eligible for waiver under the Amnesty Program:
 

• Motor fuel and special fuels taxes paid under the International Fuel Tax Agreement under G.L. c. 64F, § 5A; and
   
• Local option room occupancy excise under G.L. c. 64G, § 3A.

The Commissioner does not have the sole authority to waive penalties assessed against liabilities for these tax types. Therefore, any such penalties are not available for waiver under the Amnesty Program. St. 2002, c. 184, § 182.

II. Amnesty Period

The Commissioner has established the "Amnesty Period" to begin on October 1, 2002, and to end on December 2, 2002.

III. Participation in Amnesty Program

The Commissioner will grant amnesty to any eligible taxpayer who properly completes and files a Request for Amnesty along with all required tax return(s) and payment of the tax and interest in full. Any return(s) submitted during the Amnesty period must be properly and accurately completed and must be accompanied with a check or money order for the required amount of tax and interest in full.

• Eligibility Requirements

1. Eligible Taxpayers

The Amnesty Program is open to all taxpayers who:
 

• have failed to file a Massachusetts tax return, including, but not limited to, tax returns for personal income tax, withholding, corporate excise, sales and use tax, sales tax on meals, estate tax, inheritance tax;
   
• have underreported taxable income and/or receipts;
   
• have overstated deductions;
   
• have filed an incorrect or insufficient Massachusetts tax return; or
   
• are delinquent in paying a past state tax obligation.
   
• Taxpayers who are currently in bankruptcy should consult with their legal counsel to determine whether they may be eligible for the Amnesty Program. Bankruptcy counsel may consult with the Department to determine amnesty eligibility on a case by case basis.

Taxpayers may file combined returns of income, allowed under G.L. c. 63, § 32B, for all eligible tax years, notwithstanding the expiration of procedures for electing such filing under 830 CMR 63.32B.1(4). However, taxpayers may not file returns for inclusion as part of a combined group for any taxable period where the combined group has previously filed a combined return. All other provisions under 830 CMR 63.32B.1 remain in effect.

Taxpayers may apply for alternative apportionment, under G.L. c. 63, § 42, for all eligible tax years, notwithstanding the expiration of time for such application under 830 CMR 63.42.1(3). All other provisions under 830 CMR 63.42.1 remain in effect.

2 . Who is Not Eligible

The Commissioner will not grant amnesty to any taxpayer for any tax periods for which the taxpayer is either: (i) the subject of an on-going tax-related criminal investigation or prosecution or (ii) has been the subject of a past tax-related criminal investigation, indictment, or prosecution if that investigation, indictment, or prosecution resulted in a conviction or in any plea by which the taxpayer admitted guilt or chose not to contest the charges. The Commissioner will consider, but need not approve, an application for amnesty by a taxpayer for tax periods as to which the taxpayer has been the subject of a past tax-related criminal investigation, indictment, or prosecution if that investigation, indictment, or prosecution resulted in a not guilty finding or if the investigation, indictment, or prosecution was discontinued without either a trial or plea bargain.

Taxpayers who have signed a settlement agreement with the Commissioner are not eligible to seek amnesty for the tax periods covered by the settlement agreement including, without limitation, any settlement reached through the Department's Litigation Bureau, Office of Appeals (formerly Office of Dispute Resolution) or Offer-in-Settlement Unit.

Taxpayers who have paid all tax and interest due relating to any outstanding assessment but who, at the start of the Amnesty Period, still owe penalties with regard to that assessment are not eligible to seek amnesty for the tax period(s) covered by the assessment. Taxpayers who, as of the start of the Amnesty Period, have requested the waiver of penalties by way of an abatement application or an appeal to the Appellate Tax Board and who have paid all tax and interest but have not paid the penalties due, will not qualify for amnesty with respect to those penalty amounts.

3. Tax Periods
 

• Annual filers with tax liabilities for taxable years beginning before January 1, 2001 are eligible to request amnesty.
   
• Other filers with tax liabilities for tax periods ending on or before August 31, 2002, are eligible to request amnesty.
   
• If a taxpayer is eligible for amnesty under more than one tax type, the taxpayer must file proper and accurate returns for all tax types and all periods and pay all taxes and interest due for all tax types and tax periods. The Commissioner will not waive penalties attributable to any one filing period if the taxpayer has outstanding liabilities for other periods.
  
  4. Responsible Persons

A responsible person, as defined under G.L. c. 62C, § 31A, is any person who is or was under a duty to pay over taxes imposed on a corporation or partnership by G.L. chs. 62B, 64G, 64H, or 64I. A responsible person is eligible to participate in the Amnesty Program, as long as such person pays in full, the amount of tax and interest due for all eligible tax periods, and properly and timely files a Request for Amnesty. The Commissioner will consider such payment as satisfaction of the responsible person's personal liability. As provided in Section 12(b) of the Department's Responsible Person's regulation, 830 CMR 62C.31A.1, such payment will not satisfy the liability of the corporation or partnership or any other responsible person until one of the following conditions is satisfied:
 

• the responsible person waives his or her rights to appeal the assessment of tax and interest or otherwise to claim relief from such assessment;
   
• the period available for the responsible person to appeal the assessment or otherwise to claim relief from the assessment, through abatement or otherwise, has expired without the responsible person filing such an appeal or seeking such relief; or
   
• the responsible person's appeal or other claim for relief from the assessment results in part or all of the assessment being abated and the Commissioner does not take an appeal from that decision. In the case of a partial abatement of the assessment, the liability of the taxpayer or the liability of any responsible person is satisfied only to the extent of such partial abatement and only if the Commissioner does not appeal the decision.
  
  For further information concerning responsible persons, refer to the remaining provisions of 830 CMR 62C.31A.1.
  
  5. Taxpayers Under Current Payment Agreements
  
  Taxpayers who have entered into a Payment Agreement with the Department prior to the start of the Amnesty Period are eligible to participate in the Amnesty Program. The Commissioner will waive eligible penalties associated with any remaining installment payments due under the Payment Agreement, as long as the taxpayer pays the remaining amount of tax and interest due in full, and properly and timely files a Request for Amnesty. The Commissioner will not waive any penalties associated with the tax liability covered by the Payment Agreement that have already been paid with past installment payments made in accordance with the provisions of the Payment Agreement.

6. Appeals Pending

Any taxpayer who has an appeal pending with respect to an assessment made by the Commissioner is eligible for participation in the Amnesty Program if the taxpayer pays all taxes and interest owed in full, and properly and timely files a Request for Amnesty. Payment of the outstanding liability does not constitute a forfeiture of statutory rights of appeal or an admission of liability for the disputed assessment. For those taxpayers who have, prior to the start of the Amnesty Period, postponed the payment of an assessment of tax, interest and penalty under G.L. c. 62C, § 32(e), a written waiver to all rights under this section to further delay the payment of the tax and interest portions of the assessment must be made to participate in the Amnesty Program. St. 2002, c. 184, § 182. This waiver is to be made on the Request for Amnesty, properly and timely filed, accompanied by all required returns and full payment of tax and interest assessed.

B. Payment Requirements

1. Payment In Full

All taxpayers must make a full payment of all taxes and interest due for all tax types and tax periods, as discussed in Section III(A)(3) of this TIR, to be eligible for consideration under the Amnesty Program. Payments made by taxpayers under the Amnesty Program must be in the form of a check or money order made payable to the Commonwealth of Massachusetts. Presentation of a check that is not duly paid because of insufficient funds will result in an automatic denial of amnesty.

2. Interest Calculator

If a taxpayer cannot precisely determine the total amount of interest due, the taxpayer shall estimate the amount in good faith, and pay the estimated amount with the Request for Amnesty. The Commissioner will notify the taxpayer of any balance due. Any balance determined by the Commissioner to be due must be paid within 15 days from the date of the notice or amnesty will not be granted. For further assistance in the computation of interest, taxpayers should utilize the Interest Calculator located on the Department's Amnesty website at www.mass.gov/dor or refer to the interest tables in the instructions to the Request for Amnesty and the Interest, Penalties, and Application of Payments regulation, 830 CMR 62C.33.1.

3. Due Date

The request for amnesty will be regarded as timely if the Request for Amnesty, along with all properly and accurately completed return(s) and the required payment(s), are received by the appropriate office of the Department of Revenue as designated on the Request for Amnesty by 5:00 p.m. Eastern Standard Time, December 2, 2002. In addition, if an application is delivered by U.S. mail (or a recognized commercial delivery service) to the appropriate office after December 2, 2002, the request for amnesty will be considered timely if the date of the U.S. postmark (or other substantiating date mark) is on or before December 2, 2002.

C. Examples
 

1. A Notice of Assessment, dated March 1, 2000, was issued for the 1997 taxable year to Taxpayer, a calendar year resident individual. As of the start of the Amnesty Period, Taxpayer has paid all tax and interest assessed in full. However, Taxpayer has not paid any amount assessed that represents penalties. Taxpayer is not eligible to seek amnesty for the 1997 taxable year because no amount of the outstanding assessment balance represents tax.
    
2. Taxpayer is a foreign corporation doing business in Massachusetts as the operator of a retail store selling, among other items, taxable tangible personal property. A Notice of Assessment, dated February 5, 2001, was issued for the tax periods April 1 through May 31, 1998. As of the start of the Amnesty Period, the outstanding balance of tax and interest on that assessment is $5,000. In addition, Taxpayer has not filed returns nor remitted tax due for the tax periods June 1 through July 31, 2000. Taxpayer is eligible to seek amnesty for any penalties associated with both the 1998 and 2000 tax periods provided Taxpayer pays the outstanding assessment balance due of $5,000, files accurate and properly completed tax returns for the 2000 tax periods, pays the full amount of any tax and interest due for the 2000 tax periods, and submits a properly completed Request for Amnesty, postmarked on or before December 2, 2002 to the appropriate office of the Department.
    
3. A calendar year nonresident individual with Massachusetts source income has failed to file required returns for the 1997 through 1999 taxable years. Taxpayer's Request for Amnesty, together with the required payment and tax returns is timely received by the Department on October 25, 2002 by the appropriate office of the Department. Upon review of Taxpayer's request, the Department finds that Taxpayer's 1999 return is incomplete. The Department sends Taxpayer a notice informing Taxpayer that the request for amnesty is incomplete and that Taxpayer must properly complete the 1999 tax return and return it to the Department, postmarked by December 2, 2002. Taxpayer does not complete the 1999 return and return it to the Department within the time specified in the notice. As a result, Taxpayer's request for amnesty is automatically denied. Taxpayer is not granted amnesty for the 1999 tax year, nor is amnesty granted for the 1997 and 1998 taxable years.
   
   IV. Scope of Amnesty

A. Penalty Amnesty

If a taxpayer qualifies for amnesty, the Commissioner will waive all penalties which could be assessed for the failure of the taxpayer:
 

1. to timely file any proper return for any tax types and for any tax periods under G.L. c. 62C, §§ 30, 33, 34;
    
2. to file proper returns which report the full amount of the taxpayer's liability for any tax types and for any tax periods under G.L. c. 62C, § 28;
    
3. to timely pay any tax liability under G.L. c. 62C, §§ 33, 35 and/or G.L. c. 62B, § 7; or
    
4. to pay the proper amount of any required estimated payment toward a tax liability under G.L. c. 62B, § 14, G.L. c. 62C, § 45A, and/or G.L. c. 63B, § 3.

For Annual filers, the above penalties will be waived for taxable years beginning before January 1, 2001. For Other filers, the Commissioner will waive these same penalties for taxable periods ending on or before August 31, 2002. In either case, interest cannot be waived.

B. Criminal Investigation and Prosecution

If a taxpayer is granted amnesty by the Commissioner, the Commissioner will not initiate criminal investigation of that taxpayer nor refer the taxpayer's case to the Department of the Attorney General or Massachusetts District Attorneys for criminal prosecution for the tax and tax period(s) covered by the grant of amnesty.

V. Verification and Assessment

Any tax return filed under the Amnesty Program is subject to verification and assessment as provided by statute. G.L. c. 62C, § 26(b). If the taxpayer files a false or fraudulent or otherwise improper tax return or attempts in any manner to defeat or evade a tax under the Amnesty Program, the Commissioner may rescind the grant of amnesty and subject the taxpayer to applicable civil penalties and criminal prosecution. If a taxpayer's request for amnesty is denied, all payments and returns submitted to the Commissioner will be considered to be voluntary and payments will not be refunded. Any such payments will be applied to the taxpayer's tax account(s) in accordance with the provisions of 830 CMR 62C.33.1.

VI. Abatements

Participation in the Amnesty Program and payment of the tax and interest does not constitute a forfeiture of statutory rights of appeal or an admission of liability for the assessment.

VII. Disclosure

No return or document filed with the Commissioner under the Amnesty Program will be subject to disclosure except as provided in G.L. c. 62C, § 21 and § 22.

VIII. Information and Forms

Request For Amnesty forms, information and related returns are available on the Department's website at www.mass.gov/dor or by calling the Department's Taxpayer Service Division at [phone] or toll free in state at 1-800-392-6089. Request for Amnesty forms and other information can also be obtained through the Department's Fax on Demand system. Please call [phone] from the handset on your fax machine for a complete menu of available documents. To call for a Request for Amnesty Application, the retrieval number is 425.

[1] A two-month period beginning October 1, 2002 ends on November 30, 2002. However, since this date is a Saturday, the last day of the two-month amnesty period becomes the next business day, which is Monday, December 2, 2002. See TIR 84-3.

[2] See G.L. c. 62C, §§ 30, 33, 34.

[3] See G.L. c. 62C, § 28.

[4] See G.L. c. 62C, §§ 33, 35; G.L. c. 62B, § 7.

[5] See G.L. c. 62B, § 14; G.L. c. 62C, § 45A; G.L. c. 63B, § 3.

 

Alan LeBovidge
Commissioner of Revenue

September 26, 2002

TIR 02-14