Current through Register 1531, September 27, 2024
(1)
Statement of Purpose;
Organization.
(a)
Statement of Purpose.
830
CMR 62C.84.1 explains the criteria and
procedures a taxpayer must follow in applying for spousal relief from joint
income tax liability under M.G.L. c. 62C, § 84. M.G.L. c. 64C, § 84
provides for three types of relief from joint tax liability for a requesting
spouse: innocent spouse relief, separation of liability relief, and equitable
relief, each with its own requirements. M.G.L. c. 64C, § 84 does not
provide for an abatement of tax. Instead, it provides for circumstances in
which a requesting spouse may be relieved of liability for the tax.
830 CMR 62C.84.1 is effective
for any pending application to which M.G.L. c. 62C, § 84
applies.
(b)
Organization.
830
CMR 62C.84.1 is organized as follows:
1. Statement of Purpose;
Organization;
2.
Definitions;
3. General
Rule;
4. Innocent Spouse
Relief;
5. Separation of Liability
Relief;
6. Equitable
Relief;
7. Time and Manner of
Application;
8. Non-requesting
Spouse's Notice and Opportunity to Participate;
9. Effect of Prior Proceedings;
10. Effect of Determination; and
11. Appeal of Determination.
(2)
Definitions. For the purposes of
830
CMR 62C.84.1, the following terms have the
following meanings unless the context requires otherwise:
Assessment. The process of the
Commissioner's determination or verification of the amount of tax, as provided
under M.G.L. c. 62C, §§ 24, 25, and 26, imposed and due from a
taxpayer under M.G.L. chs. 60A; 62 through 64J; 65B and 65C; 121A, § 10;
138, § 21; and the entry of the amount of the tax due in the
Commissioner's assessment records; or the taxpayer's calculation and
declaration of the tax due, as provided under M.G.L. c. 62C, § 26(a),
completed in full on a return, including any amendment, correction, or
supplement thereto, by the taxpayer or the taxpayer's representative and duly
filed with the Commissioner, in accordance with rules adopted by the
Commissioner.
Commissioner. The Commissioner of
Revenue or the Commissioner's duly authorized representative.
Department. The Massachusetts
Department of Revenue.
Erroneous Item. Any item resulting in
an understatement or deficiency in tax to the extent that such item is omitted
from, or improperly reported (including improperly characterized) on an
individual income tax return including, but not limited to, improper omissions
from income; improper deductions, exemptions, or credits; improper carryovers
of attributes; and improper characterizations of items of income or
expense.
Joint Return. A joint return of
personal income tax as provided under M.G.L. c. 62C, § 6(a).
Non-requesting Spouse. The individual
with whom the requesting spouse filed the joint return for the year for which
relief from joint income tax liability is sought.
Notice of Assessment. The notification
to a taxpayer, under M.G.L. c. 62C, § 31, that the Commissioner has made a
deficiency assessment.
Notice of Intention to Assess. The
notification to a taxpayer, under M.G.L. c. 62C, § 26(b), that the
Commissioner intends to make a deficiency assessment after 30 days.
Requesting Spouse. An individual who
filed a joint return and requests relief from Massachusetts personal income tax
liability arising from that return under
830
CMR 62C.84.1(4) or
(5).
Tax or Taxes.
With respect to personal income tax, any tax, interest, penalty, or addition to
tax imposed by M.G.L. c. 62, 62B, and 62C, including any act in addition
thereto or amendment thereof.
Understatement. The understated tax
resulting from an erroneous item attributable to the non-requesting spouse. For
purposes of
830
CMR 82C.84.1(2), the term
"tax" excludes interest and penalties.
(3)
General Rule.
Pursuant to M.G.L. c. 62C, § 6(a), each spouse is jointly and severally
liable for the entire amount of tax due on a jointly filed personal income tax
return. However, M.G.L. c. 62C, § 84 allows a requesting spouse to seek
relief from joint tax liability where certain criteria are met. An eligible
requesting spouse may apply for innocent spouse relief (pursuant to M.G.L. c.
62C, § 84(b)), separation of liability relief (pursuant to M.G.L. c. 62C,
§ 84(c)), or both. The Commissioner may also grant equitable relief
(pursuant to M.G.L. c. 62C, § 84(d)) if he or she determines, in his or
her sole discretion, that it is inequitable to hold the requesting spouse
liable for any unpaid tax or deficiency, and the requesting spouse is not
eligible for innocent spouse or separation of liability relief. These three
types of relief are addressed respectively at
830
CMR 62C.84.1(4) through (6).
Any determination under
830
CMR 62C.84.1 shall be made without regard to
community property laws.
(4)
Innocent Spouse Relief.
(a)
Request for
Relief. An eligible requesting spouse may apply for innocent
spouse relief, pursuant to M.G.L. c. 62C, § 84(b), by submitting an
application in the manner prescribed in
830
CMR 62C.84.1(7), not later
than two years after the Commissioner has begun collection activities with
respect to the requesting spouse.
(b)
Criteria for
Eligibility. The Commissioner may grant a requesting spouse relief
from liability for an understatement of tax, including interest and penalties,
on a joint return if:
1. the understatement is
attributable to erroneous items of the non-requesting spouse;
2. the requesting spouse establishes that he
or she did not know, and had no reason to know, that there was an
understatement of tax; and
3. it is
inequitable to hold the requesting spouse liable for the deficiency in tax. In
determining whether it would be inequitable to hold the requesting spouse
liable, the Commissioner will consider all facts and circumstances including,
but not limited to, the factors described in
830
CMR
62C.84.1(4)(e).
(c)
Apportionment of
Relief. In some cases a requesting spouse would be eligible for
innocent spouse relief under
830
CMR 62C.84.1(4) but for the
application of
830
CMR 62C.84.1(4)(b)2. In
those cases a requesting spouse may establish that in signing the return he or
she did not know, and did not have reason to know, the extent of the
understatement. The requesting spouse may be relieved of liability for the
portion of the tax, including interest and penalties, for which such facts are
established.
(d)
Knowledge or Reason to Know. A requesting spouse
knows, or has reason to know, of an understatement of tax if the requesting
spouse actually knew of the understatement, or if a reasonable person in
similar circumstances would have known of the understatement. The Commissioner
will consider all facts and circumstances in determining whether a requesting
spouse had reason to know of an understatement. These facts and circumstances
include, but are not limited to:
1. The nature
of the erroneous item and the amount of the erroneous item relative to other
items;
2. The couple's financial
situation;
3. The requesting
spouse's educational background and any relevant business experience;
4. The extent of the requesting spouse's
participation in the activity that resulted in the erroneous item;
5. Whether the requesting spouse failed to
inquire, at or before the time the return was signed, about items presented on
the return or omitted from the return that a reasonable person would question;
and
6. Whether the erroneous item
represented a departure from a recurring pattern reflected in prior years'
returns.
(e)
"Inequitable" Described. Whether it is inequitable to
hold a requesting spouse liable for a deficiency in tax, within the meaning of
830
CMR 62C.84.1, will be determined on the basis
of all the facts and circumstances. In making such a determination, factors
that the Commissioner will consider include, but are not limited to:
1. whether the non-requesting spouse has
deserted the requesting spouse;
2.
whether the requesting spouse is divorced or separated from his or her spouse;
and
3. whether the requesting
spouse significantly benefited, directly or indirectly, from the understatement
of tax.
For purposes of
830
CMR 62C.84.1(4)(e),
maintaining a normal standard of living is not considered a significant
benefit. However, if it is determined that a requesting spouse maintains a
standard of living inconsistent with the amount of income reported on the
return, then the requesting spouse will be considered to have benefited.
Transfers of property, including property transferred at any
time after the year of the understatement of tax, may constitute evidence of
direct or indirect benefit. For example, if a requesting spouse receives
property (including life insurance proceeds) from the non-requesting spouse
that is beyond normal support and traceable to items omitted from gross income
that are attributable to the non-requesting spouse, the requesting spouse will
be considered to have received significant benefit from those
items.
(5)
Separation of Liability
Relief.
(a)
Request
for Relief. An eligible requesting spouse may apply for separation
of liability relief, pursuant to M.G.L. c. 62C, § 84(b), by submitting an
application in the manner prescribed in
830
CMR 62C.84.1(7), not later
than two years after the Commissioner has begun collection activities with
respect to the requesting spouse. If a requesting spouse is eligible and is
granted separation of liability relief, his or her liability for any deficiency
assessed with respect to a joint return shall not exceed the portion of the
deficiency that is properly allocable to him or her pursuant to M.G.L. c. 62C,
§ 84(c)(8) through (12).
(b)
Criteria for Eligibility.
1.
In General. A
requesting spouse is eligible to request the application of
830
CMR 62C.84.1(5) only if:
a. at the time the application is filed, he
or she is no longer married to, or is legally separated from, the individual
with whom the requesting spouse filed the joint return to which the application
relates; or
b. the requesting
spouse was not a member of the same household as the individual with whom the
joint return was filed at any time during the 12-month period ending on the
date the application is filed.
2.
Members of the Same
Household.
a.
Temporary Absences. A requesting spouse and a
non-requesting spouse are considered members of the same household during
either spouse's temporary absence from the household if it is reasonable to
assume that the absent spouse will return to the household, and the household
or a substantially equivalent household is maintained in anticipation of such
return. Examples of temporary absences may include, but are not limited to,
absence due to incarceration, illness, business, vacation, military service, or
education.
b.
Separate
Dwellings. Spouses who reside in the same dwelling are considered
members of the same household. In addition, spouses who reside in two separate
dwellings are considered members of the same household if the spouses are not
estranged or one spouse is temporarily absent from the other's household within
the meaning of
830
CMR
62C.84.1(5)(b)2.a.
3. Relief may be available to both
spouses filing the joint return if each spouse is eligible for and applies for
relief under
830
CMR 62C.84.1(5).
4.
Fraudulent
Schemes. An application under
830
CMR 62C.84.1(5) by either
spouse that filed a joint return shall be invalid if the Commissioner
determines that assets were transferred between the spouses as part of a
fraudulent scheme. In such cases, each spouse is jointly and severally liable
for the entire amount of tax due on the return pursuant to M.G.L. c. 62C,
§ 6.
(c)
Burden of Proof. Each requesting spouse who applies
for relief under
830
CMR 62C.84.1(5) shall have
the burden of proof with respect to establishing the portion of a deficiency
allocable to the requesting spouse.
(d) Request for relief not valid with respect
to certain deficiencies.
1.
In
General. If the Commissioner determines that a requesting spouse
applying for relief under
830
CMR 62C.84.1(5) had actual
knowledge, at the time he or she signed the return, of an erroneous item that
is allocable to the non-requesting spouse, the allocation of the deficiency
attributable to that item is invalid, and the requesting spouse remains liable
for the portion of the deficiency attributable to that item. For example,
assume that W knew that H received a retirement distribution but improperly
reported it as nontaxable on their joint return. W remains liable for the
portion of the deficiency attributable to the distribution.
830
CMR 62C.84.1(5)(d) shall
not apply where the requesting spouse establishes that he or she signed the
return under duress.
2.
Omitted Income. In the case of omitted income,
knowledge of the item includes knowledge of the receipt of the income. For
example, assume W received $ 5,000 of dividend income from her investment in X
Co. but did not report it on the joint return. H knew that W received $ 5,000
of dividend income from X Co. that year. H had actual knowledge of the
erroneous item (I.e., $ 5,000 of unreported dividend income
from X Co.), and no relief is available under
830
CMR 62C.84.1(5)(d) for the
deficiency attributable to the dividend income from X Co.
830
CMR 62C.84.1 applies equally in situations
where the other spouse has unreported income although the spouse does not have
an actual receipt of cash.
3.
Erroneous Deductions or Credits. In the case of an
erroneous deduction or credit, knowledge of the item means knowledge of the
facts that made the item not allowable as a deduction or credit.
4.
Fictitious or Inflated
Deductions. If a deduction is fictitious or inflated, the
Commissioner must determine that the requesting spouse actually knew that the
expenditure was not incurred, or not incurred to that extent.
5.
Partial
Knowledge. If a requesting spouse had actual knowledge of only a
portion of an erroneous item, then relief is not available for that portion of
the erroneous item. For example, if H knew that W received $1,000 of dividend
income and did not know that W received an additional $4,000 of dividend
income, relief would not be available for the portion of the deficiency
attributable to the $1,000 of dividend income of which H had actual knowledge.
A requesting spouse's actual knowledge (or lack thereof) of the proper tax
treatment of an item is not relevant for purposes of a determination that the
requesting spouse had actual knowledge of an erroneous item. For example,
assume H did not know W's dividend income from X Co. was taxable, but knew that
W received the dividend income. Relief is not available under
830
CMR 62C.84.1(5)(d)5. In
addition, a requesting spouse's knowledge of how an erroneous item was treated
on the tax return is not relevant to a determination of whether the requesting
spouse had actual knowledge of the item. For example, assume that H knew of W's
dividend income, but H failed to review the completed return and did not know
that W omitted the dividend income from the return. Relief is not available
under
830
CMR
62C.84.1(5)(a)5.
6.
Knowledge of the Source Not
Sufficient. Knowledge of the source of an erroneous item is not a
sufficient basis for a determination of actual knowledge. For example, assume H
knew that W owned X Co. stock, but H did not know that X Co. paid dividends to
W that year. H's knowledge of W's ownership in X Co. is not a sufficient
predicate for the Commissioner to determine that H had actual knowledge of the
dividend income from X Co. In addition, a requesting spouse's actual knowledge
may not be inferred when the requesting spouse merely had reason to know of the
erroneous item. Even if H's knowledge of W's ownership interest in X Co.
indicates a reason to know of the dividend income, actual knowledge of such
dividend income cannot be inferred from H's reason to know. Similarly, the
Commissioner need not find that a requesting spouse knew of the source of an
erroneous item in order to determine that the requesting spouse had actual
knowledge of the item itself. For example, assume H knew that W received
$1,000, but he did not know the source of the $1,000. W and H omit the $1,000
from their joint return. H has actual knowledge of the item giving rise to the
deficiency ($1,000), and relief is not available under
830
CMR
62C.84.1(5)(d)6.
7.
Factors Supporting Actual
Knowledge. To determine that a requesting spouse had actual
knowledge of an erroneous item at the time the return was signed, the
Commissioner may rely upon all of the facts and circumstances. One factor that
may be relied upon in determining that a requesting spouse had actual knowledge
of an erroneous item is whether the requesting spouse made a deliberate effort
to avoid learning about the item in order to be shielded from liability. This
factor, together with all other facts and circumstances, may demonstrate that
the requesting spouse had actual knowledge of the item, and the requesting
spouse would not be entitled to relief with respect to that entire item.
Another factor that may be relied upon in determining that a requesting spouse
had actual knowledge of an erroneous item is whether the requesting spouse and
the non-requesting spouse jointly owned the property that resulted in the
erroneous item. Joint ownership is a factor supporting a finding that the
requesting spouse had actual knowledge of an erroneous item. A requesting
spouse will be considered to have had an ownership interest in an item only if
the requesting spouse's name appeared on the ownership documents, or there
otherwise is an indication that the requesting spouse asserted dominion and
control over the item.
8.
Abuse Exception. If the requesting spouse establishes
that he or she was the victim of domestic abuse prior to the time the return
was signed, and that, as a result of the prior abuse, the requesting spouse did
not challenge the treatment of any items on the return for fear of the
non-requesting spouse's retaliation, the limitation on actual knowledge in
830
CMR 62C.84.1(5)(d) will not
apply. As used in
830
CMR 62C.84.1, "abuse" may include physical,
psychological, sexual, or emotional abuse.
(e)
Disqualified
Asset. Notwithstanding the provisions of
830
CMR 62C.84.1(5)(d), the
portion of a deficiency for which the requesting spouse is liable will be
increased by the value of a disqualified asset transferred to the requesting
spouse. For purposes of
830
CMR 62C.84.1(5)(e), the term
"disqualified asset" means any property or right to property that is
transferred to a spouse filing an application under
830
CMR 62C.84.1(5)(e) by the
other spouse filing a joint return, if the principal purpose of the transfer is
the avoidance of tax. The Commissioner will presume that the principal purpose
of a transfer is the avoidance of tax if the transfer is made less than one
year before the Commissioner's notice of intention to assess the tax. The
presumption will not apply to any transfer pursuant to a decree of divorce or
separate maintenance, or to any written instrument incident to such a
decree.
(f)
Allocation
of Deficiency.
1.
Allocation of Items of Deficiency.
a. Except as otherwise provided in
830
CMR 62C.84.1(5)(f), items
giving rise to a deficiency on a joint return shall be allocated to each spouse
in the same manner as they would have been allocated if the spouses had filed
separate returns for the taxable year.
b. An item otherwise allocable to one spouse
under
830
CMR 62C.84.1(5)(f)(i) a.
shall be allocated to the other spouse to the extent the item gave rise to a
tax benefit on the joint return to the other spouse.
c. Erroneous items of income are allocated to
the spouse who was the source of the income. Wage income is allocated to the
spouse who performed the services producing such wages. Items of business or
investment income are allocated to the spouse who owned the business or
investment. If both spouses owned an interest in the business or investment,
the erroneous item of income is generally allocated between the spouses in
proportion to each spouse's ownership interest in the business or investment,
subject to the provisions of
830
CMR 62C.84.1(5)(d). In the
absence of clear and convincing evidence supporting a different allocation, an
erroneous income item relating to an asset that the spouses owned jointly is
generally allocated 50% to each spouse, subject to the provisions of
830
CMR
62C.84.1(5)(d).
d. Erroneous deductions related to a business
or investment are allocated to the spouse who owned the business or investment.
If both spouses owned an interest in the business or investment, an erroneous
deduction item is generally allocated between the spouses in proportion to each
spouse's ownership interest in the business or investment. In the absence of
clear and convincing evidence supporting a different allocation, an erroneous
deduction item relating to an asset that the spouses owned jointly is generally
allocated 50% to each spouse, subject to the provisions of
830
CMR 62C.84.1(5)(d).
Deduction items unrelated to a business or investment are also generally
allocated 50% to each spouse, unless the evidence shows that a different
allocation is appropriate.
e. The
requesting spouse must prove that all of the qualifications for relief under
830
CMR 62C.84.1(5)(f) are
satisfied and that none of the limitations apply.
f. The Commissioner may allocate any item
between the spouses if the Commissioner determines that the allocation is
appropriate due to fraud by one or both spouses.
2.
Disallowance of Items Due to
Separate Return Disregarded. If an item of deduction or credit
would have been disallowed in its entirety solely because a separate return was
filed, the disallowance shall be disregarded and the item shall be computed as
if a joint return had been filed and then allocated appropriately between the
spouses.
3.
Liability
of a Child on Joint Return. Any portion of a deficiency relating
to the liability of a child of the requesting and non-requesting spouse is
allocated jointly to both spouses. For purposes of
830
CMR 62C.84.1(5)(f)2., a
child does not include the taxpayer's stepson or stepdaughter, unless such
child was legally adopted by the taxpayer. If the child is the child of only
one of the spouses, and the other spouse had not legally adopted such child,
any portion of a deficiency relating to the liability of such child is
allocated solely to the parent spouse.
4.
Ratio of
Deficiency. A spouse's portion of a deficiency on a joint return
shall bear the same ratio to the total deficiency that the net amount of the
items taken into account in computing the deficiency allocable to that spouse
under
830
CMR 62C.84.1(5)(f)4. bears
to the net amount of all items taken into account in computing the total
deficiency. For example, suppose W and H timely file a joint income tax return,
and the Commissioner assesses a $12,000 deficiency. W and H later divorce, and
W timely applies to allocate the deficiency. Four erroneous items give rise to
the deficiency:
a. a disallowed $7,000
business deduction allocable to H;
b. $9,000 of unreported income allocable to
H;
c. a disallowed $5,000 deduction
for educational expenses allocable to W; and
d. a disallowed $3,000 charitable
contribution deduction allocable to W.
In total, there are $24,000 worth of eroneous items, of which
$16,000 are attributable to H and $8,000 are attributable to W. The ratio of
erroneous items allocable to W to the total erroneous items is A
($8,000/$24,000). W's liability is thus limited to $4,000 of the deficiency (A
of $12,000). The Commissioner may collect up to $4,000 from W and $12,000 from
H (the total amount collected, however, may not exceed $12,000). If H also
applied for relief, there would be no remaining joint and several liability,
and the Commissioner would be permitted to collect $4,000 from W and $8,000
from H.
5. Any
portion of a deficiency that is:
a.
attributable to the disallowance of a credit or to a tax other than the tax
imposed by M.G.L. c. 62;
b.
required to be included with the joint return; and
c. attributable to an item allocated to one
spouse under
830
CMR 62C.84.1(5)(f) 1., shall
be allocated to that spouse. Any item giving rise to such deficiency shall not
be taken into account for purposes of
830
CMR
62C.84.1(5)(f)4.
(g) No credit or refund
shall be allowed as a result of the application of
830
CMR 62C.84.1(5).
(6)
Equitable
Relief.
(a) If relief is not
available to the requesting spouse under
830
CMR 62C.84.1(4) or
830
CMR 62C.84.1(5), and the
Commissioner determines, after taking into account all the facts and
circumstances, that it is inequitable to hold a requesting spouse liable for
any unpaid tax or deficiency, or any portion thereof, attributable to the
non-requesting spouse, the Commissioner may nonetheless relieve the requesting
spouse of joint liability. The Commissioner may grant equitable relief in his
or her sole discretion. Equitable relief is not available as a matter of
right.
(b)
Factors
Considered. In determining whether it is inequitable to hold a
requesting spouse liable for any unpaid tax or any deficiency, or any portion
thereof, the Commissioner may consider any relevant facts and circumstances.
These include, but are not limited to:
1. The
couple's marital status at the time the Commissioner makes the determination
(this factor will weigh in favor of relief if the couple is divorced or legally
separated and will be neutral if the couple is still married);
2. Whether the requesting spouse will suffer
economic hardship if relief is not granted;
3. In the case of an understatement, whether
the requesting spouse knew or had reason to know of the item giving rise to the
understatement or deficiency as of the date the joint return was
filed;
4. In the case of an
underpayment, whether the requesting spouse knew or had reason to know the tax
liability would not or could not be paid;
5. Whether the requesting spouse was the
victim of physical, psychological, sexual, or emotional abuse;
6. Whether the requesting spouse or the
non-requesting spouse has a legal obligation to pay the outstanding tax
liability;
7. Whether the
requesting spouse significantly benefitted from the unpaid tax liability or
understatement;
8. Whether the
requesting spouse has made a good faith effort to comply with the income tax
laws in the taxable years following the taxable year or years to which the
request for relief relates; and
9.
Whether the requesting spouse was in poor mental or physical health at the time
the return was filed.
(7)
Time and Manner of
Application.
(a)
Application Must Be Received within Two Years of the Beginning of
Collection Activities.
1. The
process of applying for innocent spouse relief is distinct from the process of
applying for an abatement pursuant to M.G.L. c. 62C, § 37. A taxpayer
wishing to request relief from joint income tax liability under
830
CMR 62C.84.1(4) or (5) must
submit an application for relief (as described in
830
CMR 62C.84.1(7)(b)) to the
Commissioner not later than two years after the Commissioner has begun
collection activities with respect to such taxpayer. An eligible taxpayer may
submit a single claim seeking relief under either
830
CMR 62C.84.1(4) or (5), or
both.
2. A requesting spouse's
failure to receive a notice from the Commissioner does not extend the period
for claiming relief under M.G.L. c. 62C, § 84. In accordance with
830
CMR 62C.26.1, notices regarding income tax
liability are sent to a taxpayer's last known address as it appears on the
taxpayer's most recent income tax return or on a properly completed and
submitted change of taxpayer's address form, whichever is last received by the
Commissioner.
3. For purposes of
830
CMR 62C.84.1(4) and (5)
collection activities include, but are not limited to:
a. A bank account levy or a wage
levy;
b. A lien, bill, or notice
from the Commissioner of the commencement of collection activities (including a
Notice of Intent to Assess, Notice of Assessment, Statement of Account, Final
Notice, or Notice of Levy);
c.
Offset of a tax refund;
d.
Intercept of a state and/or federal refund or other government
payment;
e. Intercept of insurance
proceeds, lottery or casino winnings;
f. Suspension or revocation of a driver's
license and/or a vehicle registration;
g. Suspension, revocation or non-renewal of a
professional license or certificate;
h. Addition of the requesting spouse to the
public disclosure list of delinquent taxpayers; and
i. Seizure of business or other
assets.
(b)
Content of Application for Relief from Joint Income Tax
Liability. The application for relief under
830
CMR 62C.84.1(4) and
830
CMR 62C.84.1(5) must
contain:
1. the name, address and taxpayer
identification numbers of the requesting spouse and the non-requesting
spouse;
2. a completed U.S. Form
8857, Request for Innocent Spouse Relief (including any supporting or related
documentation), irrespective as to whether such Form was or is to be filed for
federal purposes; and
3. a written
statement or affidavit, signed under the penalties of perjury, containing all
the facts necessary for determining that the requirements of
830
CMR 62C.84.1 are satisfied.
The burden is on the taxpayer to establish that he or she
qualifies for relief under M.G.L. c. 62C, § 84. The requesting spouse must
indicate on the application for relief whether he or she has applied for and
received relief from federal tax liability under I.R.C. § 6015(b), (c), or
(f). If the taxpayer has applied for relief from federal tax liability as an
innocent spouse, he or she should also submit the final federal determination
letter and the relevant federal tax return, including any supporting or related
documentation.
(c)
Written Notice of Determination. The Commissioner will
determine whether the requesting spouse is eligible for relief under M.G.L. c.
62C, § 84, and will issue a written notice thereof to the requesting
spouse.
(d)
Stay of
Involuntary Collection. The filing of an application for relief
shall stay involuntary collection of the disputed portion of tax imposed by
M.G.L. c. 62, provided that the taxes at issue were not withheld by the
requesting spouse's employer. The statute of limitations for collection of
taxes in M.G.L. c. 62C, § 65, and the date of termination of tax liens in
M.G.L. c. 62C, § 50, is extended by the period that collection of the tax
is stayed by M.G.L. c. 62C, § 32(e). Interest and penalties under M.G.L.
c. 62C, §§ 33(a) and 33(b) will continue to accrue. The stay expires
on the date on which any right of appeal from a refusal by the Commissioner to
grant relief expires without any appeal to the Appellate Tax Board, or as
otherwise provided in M.G.L. c. 62C, § 32(e).
(8)
Non-requesting Spouse's
Notice and Opportunity to Participate.
(a)
In General.
1. When the Commissioner receives an
application for relief, the Commissioner will send a notice to the
non-requesting spouse's last known address that informs the non-requesting
spouse of the requesting spouse's claim for relief. The notice will provide the
non-requesting spouse with an opportunity to submit any information that should
be considered in determining whether the requesting spouse should be granted
relief from the joint and several liability requested. A non-requesting spouse
is not required to submit information. Upon the request of either spouse, the
Commissioner will share with one spouse the substantive information submitted
by the other spouse, unless the Commissioner determines that the sharing of
such information would impair tax administration. The Commissioner will not
share the contact information of one spouse with the other spouse.
2. The non-requesting spouse's failure to
receive notice of the requesting spouse's claim for relief shall not affect the
validity of the requesting spouse's application for relief.
3. The Commissioner will send a notice to the
non-requesting spouse's last known address informing the non-requesting spouse
of his or her determination with respect to the requesting spouse's claim for
relief under M.G.L. c. 62C, § 84.
(b)
Information That Will Be
Considered. The Commissioner may consider any information (as
relevant to each particular relief provision) that the non-requesting spouse
submits or that is otherwise available to the Commissioner in determining
whether relief from joint and several liability is appropriate for the
requesting spouse, including information relating to the following:
1. The legal status of the requesting and
non-requesting spouses' marriage;
2. The extent of the requesting spouse's
knowledge of the erroneous items or underpayment;
3. The extent of the requesting spouse's
knowledge or participation in the family business or financial
affairs;
4. The requesting spouse's
education level;
5. The extent to
which the requesting spouse benefited from the erroneous items;
6. Any asset transfers between the
spouses;
7. Any indication of fraud
on the part of either spouse;
8.
Whether it would be inequitable, within the meaning of
830
CMR 62C.84.1(4)(e) to hold
the requesting spouse jointly and severally liable for the outstanding
liability;
9. The allocation or
ownership of items giving rise to the deficiency; and
10. Anything else that may be relevant to the
determination of whether relief from joint and several liability should be
granted.
(c)
Effect of Failure to Submit Information. The failure
of the non-requesting spouse to submit information pursuant to
830
CMR 62C.84.1(8)(b) does not
affect the non-requesting spouse's ability to seek relief from joint and
several liability for the same tax year. However, information that the
non-requesting spouse submits pursuant to
830
CMR 62C.84.1(8)(b) is
relevant in determining whether relief from joint and several liability is
appropriate for the non-requesting spouse should the non-requesting spouse also
submit an application for relief.
(9)
Effect of Prior
Proceedings.
(a)
In
General. A final decision regarding the requesting spouse's tax
liability by a Massachusetts court or the Appellate Tax Board in a prior
proceeding for the same taxable year shall be conclusive as to the
qualification of a requesting spouse for relief under
830
CMR 62C.84.1, so long as:
1. relief under
830
CMR 62C.84.1 was at issue in the prior
proceeding; or
2. the requesting
spouse meaningfully participated in the prior proceeding and could have raised
relief under
830
CMR 62C.84.1. If relief under
830
CMR 62C.84.1 was not at issue in the prior
proceeding and the requesting spouse did not meaningfully participate in the
prior proceeding, the decision is not conclusive as to the qualification of the
requesting spouse for relief.
(b)
Meaningful
Participation. In determining whether a requesting spouse
participated meaningfully in the prior proceeding, the Commissioner will
consider all relevant information relating to the prior proceeding including,
but not limited to, whether the requesting spouse:
1. Was represented by an attorney;
2. Signed court documents;
3. Spoke at, or otherwise participated in,
pretrial meetings or settlement negotiations;
4. Appeared at the trial;
5. Contributed to decision-making during
trial; and
6. Testified at the
trial.
(10)
Effect of Determination. A grant of relief by the
Commissioner under M.G.L. c. 62C, § 84, and
830
CMR 62C.84.1, relieves the requesting spouse
of liability for income tax only to the extent specified in the Commissioner's
determination. The requesting spouse remains jointly and severally liable for
any amounts where relief is not provided. Additionally, the non-requesting
spouse remains liable for the entire tax determined to be due regardless of the
Commissioner's determination as to the requesting spouse. If the Commissioner
finds that relief was obtained by false or fraudulent means, the grant of
relief will be deemed void.
(11)
Appeal of Determination. A requesting spouse that is
denied relief under
830
CMR 62C.84.1(4) or
830
CMR 62C.84.1(5) may appeal
such denial by filing a petition with the Appellate Tax Board within 60 days
after the date of the Commissioner's written notice of determination.
