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Tax Alert: Immediate Action Required: Act by April 1 to Certify Corporate Taxation Status for Personal Property Tax Purposes


 

3/25/13
 
Synopsis:
 
The Massachusetts Department of Revenue requires all corporations claiming certain property tax benefits and exemptions to certify their tax status online. The deadline for this certification is April 1, 2013. 
 
Suggested Action:
 
Please contact a CohnReznick tax professional to complete your certification and to discuss its impact on your tax position.
 
Issue:
 
In Massachusetts, all personal property is subject to tax unless specifically exempt.  Certain exemptions, including the manufacturing exemption for machinery, only apply if the taxpayer electronically files its “Annual Certification of Entity Tax Status” (“Certification”) by April 1 of each year. 
 
Each year, the Commissioner of the Massachusetts Department of Revenue (“DOR”) issues an Annual List of Corporations Subject to Taxation in Massachusetts (the “List”) setting forth the tax status of every corporation doing business in Massachusetts. The List is used by the board of assessors in each municipality in determining which corporations are entitled to local property tax benefits.  For example, corporations classified as “manufacturing corporations” are not subject to personal property tax on their machinery.  
 
In the past, the List was compiled by the DOR using a variety of sources, including prior tax filing history, which often resulted in inaccurate “tax status” classifications.  For 2013, any entity wishing to claim certain property tax benefits must file its Certification online through the DOR’s website. The deadline to complete the Certification is April 1. Failure to file by April 1 may result in loss of tax benefits provided to otherwise eligible corporations.
 
The certification requirement applies to entities that are taxed as corporations as of January 1, 2013. This includes pass-through and disregarded entities that elect to be taxed as corporations for federal income tax purposes. Entities that are treated as partnerships or disregarded entities for federal tax purposes are not allowed to claim the manufacturing exemption provided to corporations.
 
Contact:
 
For more information, please visit our State and Local Tax webpage and contact Patrick Duffany, Partner and National Director of State and Local Tax Services, at 860-368-3607.
 

 

Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.
 
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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