Massachusetts DOR announces tax amnesty dates and terms

In brief

What happened?

The Massachusetts Department of Revenue (DOR) on September 19 issued a press release announcing that it will administer an amnesty program from November 1 through December 30, 2024 for a wide variety of taxes and fees including corporate excise tax, financial institution excise tax, personal income tax, pass-through entity withholding, and sales and use tax. Under the amnesty, tax and interest must be paid but penalties will be waived for returns due on or before December 31, 2024.  

Why is it relevant? 

For the first time in 10 years, Massachusetts is providing an amnesty program with penalty relief and a reduced look-back period for non-filers. The DOR’s announcement confirms that this amnesty will be broader than the prior amnesty in several significant ways, including applying the amnesty to a range of taxes and fees and extending the amnesty to non-filers, taxpayers with an outstanding balance due, taxpayers currently under audit, and taxpayers filing amended returns to report previously unreported income.  

Actions to consider 

Taxpayers should consider the potential application of the amnesty to their particular facts, especially in light of the DOR’s decision to extend the amnesty to a broader range of tax types and taxpayer situations.  

Eligible taxpayers

Taxpayers that are eligible for the amnesty program include those 

• with unfiled returns, underreported obligations, or existing tax liabilities,  
• currently under an audit that will result in a penalty assessment, and 
• with pending Resolution/Office of Appeals cases, pending cases with the Appellate Tax Board, and open Collection cases. 

Taxpayers are ineligible if they are seeking a waiver of penalties related to assessments already paid or seeking a refund of tax or credit of an overpayment. Further, if the taxpayer received prior amnesty relief in 2015 or 2016, the taxpayer is ineligible “for the same tax type and period.” 

Observation: Note that the 2014-2015 amnesty law prevented a taxpayer coming forward under that amnesty “from utilizing any future tax amnesty programs for the next consecutive 10 years, beginning in calendar year 2015.” The DOR’s guidance appears to be limiting ineligibility to the specific tax types and periods that were the subject of the prior amnesty. 

Filing periods and look-back

The amnesty applies to all filing periods with a return due on or before December 31, 2024. The DOR provides that “there is no limit on how far back a taxpayer can go to report or pay back taxes.” However, the DOR states that it “will only require an eligible non-filer to file returns for the three prior years—returns due from January 1, 2022, through December 31, 2024, without regard to extensions.” This is in lieu of the generally applicable seven-year lookback for non-filers.  

The following taxpayers are not eligible for limited look-back, however:  

• non-filers who have been contacted by DOR about unfiled returns, 
• taxpayers reporting trustee taxes (i.e., sales and use, meals, withholding, etc.) where the tax was collected but not paid to the Commonwealth, and 
•  taxpayers filing estate tax returns. 

Observation: The amnesty is broader than the DOR’s voluntary disclosure program and also might include the waiver of the underpayment of estimated tax penalty (which is not waived for taxpayers coming forward through voluntary disclosure). The legislation authorizing the amnesty states that the penalties waived could include the penalty for “the proper amount of any required estimated payment toward a tax liability,” but the amnesty guidance issued by the DOR thus far does not address the types of penalties that will be waived though the amnesty program. Also, during some prior amnesties, the DOR has suspended its voluntary disclosure program. It is not clear yet whether the DOR will suspend its voluntary disclosure program during or for a period after this amnesty.

Anticipated process

The DOR’s press release provides that a link to the required Amnesty Request will be available as of November 1. Taxpayers who wish to apply for amnesty must submit their Amnesty Request on MassTaxConnect by December 30, 2024. The DOR will send an Amnesty Eligibility Letter to taxpayers with an existing tax liability, including liabilities resulting from a closed audit.  

Taxpayers who underreported their tax liability should submit an Amnesty Request and file associated amended returns through standard channels. Non-filers and first-time filers should submit an Amnesty Request and file the original return(s) electronically on MassTaxConnect or through third-party software (Modernized e-File).  

Taxpayers with an open audit that would like to participate in the amnesty are directed to contact their assigned auditor at the DOR. These taxpayers will need to agree to the audit adjustment, submit an Amnesty Request, and file a return to report the additional tax. 

In all cases, returns included in the Amnesty Request must be filed, and full payment of the tax and interest paid, by December 30, 2024. 

Observation: To request amnesty for multiple account types, taxpayers must submit a separate Amnesty Request for each tax type. Once submitted, Amnesty Requests cannot be changed. However, a new amnesty request may include additional tax periods.