Massachusetts Tax Amnesty Program

Summary 

As of March 16, 2015, approximately 24,000 Massachusetts qualifying taxpayers were given notice about the opportunity to participate in a 60-day amnesty program. Tax amnesty programs are designed to encourage payment of delinquent taxes by providing a one-time abatement of the penalties associated with those delinquent taxes. The Massachusetts tax amnesty period is open from March 16, 2015, to May 15, 2015, and applies to tax liabilities assessed on or before January 2015.

Discussion

Several tax types not historically covered in previous programs are included under this amnesty program. They include Corporate Excise, Estate, Fiduciary Income, and Individual Use Tax on Motor Vehicles. Qualifying taxpayers should have received a tax amnesty notice. Taxpayers who have not received a notice may still qualify if they can prove an economic hardship or meet other specific requirements. Taxpayers who qualify should carefully consider the pros and cons of participating in this amnesty program. 

It has been 4 ½ months since the end of the last tax amnesty program, preceded by one in 2009. The risk in not participating in this infrequent amnesty program is that a taxpayer may not have the opportunity to take advantage of the penalty abatement again for several years. In addition, some states have imposed additional penalties on taxpayers that did not take advantage of the amnesty program when offered.

Conversely, participants in the tax amnesty program must waive their rights to refund any amounts paid through the program. This means if participants determine at a later date the tax should not have been paid, they will be unable to recover the overpaid tax liabilities. 

How does this affect my business?

When considering whether or not to participate in this amnesty program, taxpayers should weigh all the factors before making a final decision. Examples of some factors to consider are the materiality of the liability due, taxpayer agreement/disagreement with the terms and condition, tax which is rightfully due, and the amount of the taxpayer’s personnel and administrative resources that will be utilized.

For more information on this tax amnesty program and how it may apply to your business, please contact us.