Current through Register 1531, September 27, 2024
(1)
Statement of Purpose; Application; Organization.
(a) The purpose of 830 CMR 62C.30.1 is to
describe the requirements and procedures for a Massachusetts taxpayer to report
and adjust the tax due to the Commonwealth after a change in federal taxable
income, federal tax credits, or federal taxable estate. Persons and
corporations subject to taxation under M.G.L. chs. 62 and 63, respectively,
must report to Massachusetts when federal taxable income or federal tax credits
are finally determined by the federal government to be different from the
taxable income or credits originally reported. Estates subject to taxation
under M.G.L. c. 65C must report to Massachusetts when the federal taxable
estate is finally determined by the federal government to be different from the
taxable estate originally reported. See M.G.L. c. 62C, §
30.
(b)830 CMR 62C.30.1 applies to
taxes imposed under M.G.L. chs. 62, 63, and 65C.
(c)830 CMR 62C.30.1 is organized as follows:
1. Statement of Purpose; Application;
Organization
2.
Definitions
3. Reporting Federal
Change
4. Date of Assessment with
Respect to Federal Change; Determination of Amount of Assessment with Respect
to Federal Change
5. Taxpayer
Offset of Tax Due
6. Amended
Returns with Respect to Federal Change
7. Penalties and Interest
(2)
Definitions. For the purposes of 830 CMR 62C.30.1
only, the following terms shall have the following meanings:
Abatement, a reduction of an amount of
tax that equals the difference between the amount of tax assessed as a result
of an assessment or deemed assessment and the lower amount of tax properly
due.
Commissioner, the Commissioner of
Revenue or the Commissioner's designee duly authorized to perform the duties of
the Commissioner.
Department, the Department of
Revenue.
Duly Filed, filed correctly and
completely in the manner prescribed by the Commissioner.
Federal Determination, an action taken
under federal law that determines a taxpayer's federal taxable income, federal
tax credits, or federal taxable estate to be different from that originally
reported to the federal government. A federal determination includes, without
limitation:
(a) an agreement between
the taxpayer and the Commissioner of Internal Revenue to an assessment of any
type of liability, including an accepted offer in compromise on an issue of
liability;
(b) an executed closing
agreement;
(c) any final decision
or dismissal by a federal court or tax court resulting in the assessment of a
deficiency or in the abatement of an assessed liability;
(d) an assessment based on a defaulted Notice
of Deficiency or clerical or mathematical error;
(e) a federal closing letter;
(f) any of the above with regard to a
partnership or flow-through entity affecting the tax of a partner or member;
or
(g) any of the above with regard
to an S Corporation affecting the tax of an S Corporation shareholder.
With regard to partnerships or flow-through entities,
Federal Determination includes federal actions that
affect partnership or entity items, such as a Notice of Final Partnership
Administrative Adjustment, or a disallowance in whole or in part of an
Administrative Adjustment Request. An accepted offer in compromise on an issue
of ability to pay is not a federal determination for purposes of 830 CMR
62C.30.1.
Federal Tax Credit, a direct reduction
of tax due arising from a tax credit or similar provision in the Internal
Revenue Code that affects Massachusetts tax liability.
Final Determination, a federal
determination when there is no right of administrative or judicial appeal. A
federal determination is deemed final, for a taxpayer with a right of appeal,
if no appeal is taken. A federal determination is final on the date of decision
in the court of last resort. A judicial determination is deemed final on the
date the right to any further appeal expires if the appeal is not carried to
the court of last resort. For purposes of 830 CMR 62C.30.1, Final
Determination is not limited to the meaning of the term when used
by the Internal Revenue Service in connection with a closing agreement.
Offset,
(a) a reduction, proposed by the taxpayer at
the time of the report of federal change, in the amount of payment owed by a
taxpayer after a federal change, subject to the Commissioner's approval;
or
(b) a reduction by the
Commissioner in the amount of an abatement requested as a result of a federal
change.
Tax or Taxes, any tax imposed under
M.G.L. c. 62, 63, or 65C, and any interest or penalties imposed under M.G.L. c.
62C and treated as additional tax.
Taxpayer, any individual, partnership,
trust, estate, or any other fiduciary subject to taxation under M.G.L. c. 62 or
65C, or any corporation or other entity subject to taxation under M.G.L. c.
63.
(3)
Reporting Federal Change.
(a)
M.G.L. c. 62
Taxpayers. A taxpayer subject to taxation under M.G.L. c. 62 must
report to the Commissioner any change in federal taxable income or federal tax
credits resulting in increased Massachusetts tax liability within one year of
the date of notice of the federal government's final determination, whether or
not the audit or other review is complete with respect to issues not addressed
in the agreement, accompanied by payment of any additional tax due plus
interest. Interest is calculated under the provisions of M.G.L. c. 62C, §
32, from the due date of the original return. Offsets do not affect the
determination whether Massachusetts tax liability has increased due to a
federal change.
Taxpayers subject to taxation under M.G.L. c. 62 must report
changes in federal taxable income in the manner prescribed by the Commissioner
and must submit a copy of the federal Revenue Agent's Report, agreement,
document, or any other federal report that provides the necessary information
illustrating the changes in federal taxable income or federal tax credits. The
filing agent for a composite return shall report when there is any final
determination, allocated among the affected taxpayers, that increases any
taxpayer's Massachusetts tax liability.
(b)
M.G.L. c. 63
Taxpayers. 830 CMR 62C.30.1(3)(a) applies to taxpayers subject to
taxation under M.G.L. c. 63, except that these taxpayers must report and pay
any additional tax due, plus interest, within three months of the date of
notice of the federal government's final determination. The principal reporting
corporation for a combined filing group shall report when there is any final
determination that changes the Massachusetts tax liability of any member of the
group, or of any other member of a federal consolidated group that includes a
member of the combined filing group. The principal reporting corporation must
provide sufficient detail to properly attribute and allocate the federal
adjustments to group members, and to reconcile such amounts with the final
determination.
(c)
M.G.L. c. 65C Taxpayers. 830 CMR 62C.30.1(3)(a)
applies to taxpayers subject to taxation under M.G.L. c. 65C, except that these
taxpayers must report and pay any additional tax due, plus interest, within two
months of the date of notice of the federal government's final
determination.
(d)
Procedures Applicable to all Taxpayers. Effective
December 5, 2016, all taxpayers shall report all federal changes to the
Commissioner by filing an amended return, in the manner prescribed in
830 CMR
62C.26.2.
(4)
Date of Assessment with
Respect to Federal Change; Determination of Amount of Assessment with Respect
to Federal Change.
(a)
Date of Assessment with Respect to Federal Change.
1.
Taxpayer
Self-assessment. The tax is deemed to be assessed with regard to a
report of federal change under 830 CMR 62C.30.1(3), at the time when the report
of federal change is duly filed.
2.
Commissioner Deficiency Assessment. For the purposes
of 830 CMR 62C.30.1, the tax is assessed upon the issuance of a Notice of
Assessment to a taxpayer, or the entry in the Commissioner's books and records
of an amount due from the taxpayer, if such entry predates the Notice of
Assessment.
(b)
Determination of Assessment Amount with Respect to Federal
Change.
1.
Taxpayer
Self-assessment. Taxes are deemed to be assessed with the
taxpayer's calculation and declaration of the tax due, as provided under M.G.L.
c. 62C, § 26(a), reported as prescribed by the Commissioner, by the
taxpayer or the taxpayer's representative and duly filed with the Commissioner.
The deemed assessment is the amount due before any offsets are claimed by the
taxpayer.
2.
Deficiency
Assessment by the Commissioner.
a.
Full Amount of Tax Not
Assessed. If the Commissioner determines from the taxpayer's
report of federal change or upon investigation that the full amount of tax
resulting from the federal change has not been assessed or deemed to be
assessed, the Commissioner will assess, notwithstanding any limitation in
M.G.L. c. 62C, § 26, the full amount of tax with interest, as provided in
M.G.L. c. 62C, § 32, from the due date of the original return. Any
assessment under 830 CMR 62C.30.1(4)(b)2. will be made in the manner provided
in
830 CMR
62C.26.1.
b.
Limitation Period for
Assessment. The Commissioner will make any deficiency assessment
within one year of receiving a taxpayer's report of federal change, as provided
in 830 CMR 62C.30.1(3). Where no report of federal change is filed as provided
in 830 CMR 62C.30.1(3), the Commissioner will make any deficiency assessments
within two years of receiving information from the federal government that it
has made a final determination of a taxpayer's federal taxable income, federal
tax credits, or federal taxable estate that is different from the amount
originally reported. The Commissioner has two years from receipt of information
from the federal government to make deficiency assessments.
c.
Limitation on Items
Assessed. Any assessment made under 830 CMR 62C.30.1(4)(b)2. is
limited to changes in taxpayer's tax liability directly attributable to
changes, adjustments, or corrections to the taxpayer's federal taxable income
or federal credits or federal taxable estate resulting in a final
determination.
(5)
Taxpayer Offset of Tax
Due.
(a)
General. When a taxpayer reports a change in federal
taxable income, federal tax credits, or federal taxable estate that results in
additional tax due to Massachusetts, the taxpayer may propose that the
additional tax be offset based on issues for the same tax type and tax year
that are unrelated to the federal change by attaching an application justifying
the offset, with worksheets as necessary, to the report of federal change. The
additional tax due as a result of the federal change may not be offset below
zero. Any statement or worksheet attached to the taxpayer's report is
considered part of the report of federal change.
(b)
Procedure. The
reporting and offsetting procedure is as follows:
1. A taxpayer must report federal changes as
provided in 830 CMR 62C.30.1(3). The taxpayer must report increases in
Massachusetts tax resulting from the change in federal taxable gross income,
federal tax credits or federal taxable estate without offsets.
2. To offset any increased taxes for the
taxable year in which the federal change applies, the taxpayer must request an
offset amount and attach a statement justifying the offset to its report of
federal change. The taxpayer may attach worksheets illustrating the tax effect
and showing the revised amount after offsets have been taken into
account.
3. The Commissioner will
make an assessment of the tax, as provided in 830 CMR 62C.30.1(4), based upon
the report of federal change. The Commissioner will determine the taxpayer's
balance due, taking into consideration the taxpayer's offset request, including
the taxpayer's statement and worksheets justifying the proposed
offsets.
(6)
Amended Returns with Respect to Federal Change.
(a)
General Rule.
Effective December 5, 2016, if, as a result of the change by the federal
government in a taxpayer's federal taxable gross income, federal tax credits,
or federal taxable estate, a taxpayer believes that a lesser tax was due the
Commonwealth than was assessed or paid, the taxpayer shall file an amended
return reporting, in the manner prescribed by the Commissioner in
830 CMR 62C.26.2,
the amount of Massachusetts tax determined as a result of the federal change
and the amount of the claimed overpayment, accompanied by a copy of the federal
revenue agent's report, agreement, document, or any other federal report
illustrating the changes in federal taxable income, federal tax credits, or
federal taxable estate. The taxpayer's amended return is limited to changes in
the taxpayer's tax liability directly attributable to changes, adjustments, or
corrections to the taxpayer's federal taxable income, federal tax credits, or
federal taxable estate resulting in a final determination.
(b)
Limitation Period for Amended
Returns. Amended returns reporting a federal change under 830 CMR
62C.30.1 shall be filed within one year of the date of the notice to the
taxpayer of final determination by the federal government.
(c)
Limitation on the Federal
Change Amount. Any reduction in tax shown on an amended return as
a result of a federal change under M.G.L. c. 62C, § 30 is limited to the
reduction in Massachusetts taxes that results from the federal
change.
(d)
Substantiation. The taxpayer shall, at the time of
filing its amended return, include and attach to it all supporting information,
documents, explanations, arguments and authorities that will reasonably enable
the Commissioner to determine whether the taxpayer is entitled to the reduction
in tax requested. In certain instances an amended return showing a reduction in
tax may be treated by DOR as an application for abatement and will be subject
to the substantiation requirements set forth in
830 CMR
62C.37.1(6).
(e)
Commissioner
Offsets. The Commissioner may offset the amount of any overpayment
resulting from a federal changewith any additional tax due whether or not the
additional tax is based on issues related to the change. Offsets based on
issues unrelated to the change may reduce or eliminate the abatement, but any
such offset shall not give rise to a net amount of tax due based on an
assessment that would otherwise be barred as untimely. Any refund resulting
from a federal change is also subject to intercept.
(f)
Correlation with Limitation
Period for Amended Returns under M.G.L. c. 62C, §§ 36 and
37. Notwithstanding M.G.L. c. 62C, § 30 and 830 CMR
62C.30.1(6)(a) through (d)supra, a taxpayer may file an
amended return seeking a reduction in tax, including tax assessed as a result
of a change in federal taxable gross income, federal credit, or federal taxable
estate, in accordance with the limitations provided in M.G.L. c. 62C,
§§ 36 and 37.
(7)
Penalties and
Interest.
(a)
Imposition. Any taxpayer that fails to timely submit a
report of federal change or pay any additional tax due plus interest will be
assessed a penalty of 10% of the additional tax due in addition to any other
applicable interest and penalties. The penalty becomes a part of the additional
tax due. Penalties and interest may apply to amounts claimed as offsets that
are disallowed by the Commissioner.
(b)
Abatement of
Penalties. The Commissioner may abate for reasonable cause any
penalties imposed under 830 CMR 62C.30.1(7). A taxpayer seeking an abatement of
any penalties must present specific facts establishing that its failure to
submit a timely report of federal change was due to reasonable cause. A mere
assertion, by affidavit or otherwise, that a taxpayer's failure to timely file
a report of federal change was reasonable or excusable due to oversight or
inadvertence is insufficient to establish reasonable cause.
(c)
Interest Payable by Taxpayers
on Additional Amount Due Resulting from Federal Change. Interest
for a taxpayer duly filing a report of federal change will be calculated on the
balance due after offsets have been taken into account. Interest on the balance
due amount will accrue from the due date of the original return as provided
under M.G.L. c. 62C, § 32(b).
(d)
Interest Payable by
Commissioner. The Commissioner will pay interest on overpayments
resulting from a federal change, reduced for any offsets made by the
Commissioner, calculated from the date of receipt of a duly filed report of
federal change at the rate provided for overpayments.
