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Massachusetts Authorizes Tax Amnesty Program


7/23/14

Synopsis
 
On July 11, 2014, Massachusetts Governor Deval Patrick signed the state’s Fiscal Year 2015 budget bill, authorizing a tax amnesty program, along with other business tax changes.
 
Issue
 
Massachusetts’ fiscal year 2015 budget contains significant new provisions, including:
 
Tax Amnesty Program

The amnesty program will run for two consecutive months within Fiscal Year 2015. The specific dates for the amnesty program are yet to be determined. Under the program, all penalties assessed against a taxpayer for past due taxes will be waived if the taxpayer pays any outstanding tax liabilities by June 30, 2015. The tax amnesty program applies to a wide range of taxes, including:

  • Sales and use tax
  • Sales tax on telecommunications services
  • Meals tax and meals tax local option
  • Personal income tax withholding
  • Pass-through entity withholding
  • Deeds excise tax
  • Convention center financing fees on room occupancy in certain cities
  • Gasoline and special fuels excises
     

At its discretion, the Commissioner of Revenue may add other taxes to the program. Taxpayers who are being criminally investigated or prosecuted for their tax filings or payments may not participate in the amnesty program.
 
If a taxpayer does not pay the full liability before the June 30, 2015 amnesty deadline, Massachusetts will retain any payments made and apply them against the taxpayer’s existing tax liability and penalties.
 
Any taxpayer who participates in Massachusetts’ amnesty program may not participate in a future state tax amnesty program for the next 10 consecutive years, beginning in calendar year 2015.
 
Other Business Tax Changes

  • The FAS 109 deduction, which is available to certain combined reporting groups that have an increase in net deferred tax liability as a result of mandatory combined reporting, is delayed until 2016
  • The sunset date for the historic rehabilitation credit is extended from December 31, 2017 to December 31, 2022
  • Corporations and real estate investment trusts (REITs) computing the net worth component of the corporate excise tax must include investments in subsidiaries without voting stock. This applies if they own an 80% or more interest in the subsidiaries
     

What Does CohnReznick Think?
Tax amnesty programs provide a great opportunity to address unpaid state liabilities (although voluntary disclosure programs often provide a more beneficial result). Taxpayers wishing to pay past due taxes should compute the benefit to them, using both Massachusetts’ voluntary disclosure and tax amnesty programs.

Contact

For more information, please contact Matt Nick, Senior Manager, at 860-271-7933 or Patrick Duffany, Partner State and Local Tax Practice Leader, at 860-368-3607.
 
To learn more about CohnReznick’s State and Local Tax Practice, please visit our webpage.


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This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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