• Massachusetts 2014 Tax Amnesty Program
  • September 5, 2014 | Author: Seth G. Cohen
  • Law Firm: Withers Bergman LLP - New Haven Office
  • Massachusetts recently announced that it would be instituting a tax amnesty through which eligible taxpayers can obtain limited relief from penalties. Importantly, the Program is by invitation only and for only those assessments that existed prior to July 1, 2014. The decision to participate, however, is complicated and should be made in light of the existence of other ways to work with Massachusetts tax debt.

    Introduction

    On July 11, 2014, the Commonwealth of Massachusetts passed H.B 4001 which established a tax amnesty program that will begin on September 1, 2014 and end on October 31, 2014.

    By participating in the Program, a taxpayer can pay back taxes without incurring penalties. In addition to providing penalty relief, the Program does not preclude a taxpayer from appealing the imposition of those taxes if it is believed they were assessed in error and the ability to appeal is otherwise present.

    2014 Amnesty Program in More Detail:

    Taxes Included in Program:

    Currently, the amnesty program includes the following taxes:

    • Individual income tax
    • Sales and use tax
    • Withholding (income, performer, pass-through entity, lottery annuity)
    • Cigarette, cigar and smoking tobacco excise
    • Gasoline excise
    • Club alcoholic beverage excise
    • Materialman sales tax
    • Meals tax, including local option
    • Convention Center Financing Fees (CCF) on rooms, parking and tours (applicable locations)
    • Room occupancy excise, including local option
    • Special fuels excise Boat and recreational vehicle sales tax

    Program Caveats (as of the Date of this Alert):

    • Interest will not be waived
    • Corporate excise tax is not included
    • There is no limited look-back period
    • Taxpayers will be unable to participate in future tax amnesty programs for ten years from the 2015 calendar year
    • Penalties will not be waived for taxpayers that were the subject of a tax related criminal investigation or prosecution

    Participation Eligibility:

    Participation is by invitation only. Notices detailing the amount of tax and interest to be paid under the Program, along with the penalties to be waived, will be mailed on September 2, 2014 to qualifying taxpayers. If the indicated tax and interest is then paid on or before October 31, 2014, penalties will be waived.

    Right to Appeal:

    A taxpayer who participates in the amnesty is not precluded from pursuing an appeal relating to the assessment. For example, if the taxpayer is successful in disputing the assessment, they can receive a tax refund of tax paid through the amnesty program. Alternatively, if a taxpayer is not successful in appealing an assessment, they will have benefited from utilizing the amnesty program because they will have avoided tax penalties.