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Massachusetts Offers Tax Amnesty with Penalty Relief for Qualified Taxpayers

Massachusetts Offers Tax Amnesty with Penalty Relief for Qualified Taxpayers, Frazier & Deeter

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    From November 1 to December 30, 2024, the Commonwealth of Massachusetts will waive most penalties for eligible taxpayers who file outstanding returns and pay tax and interest owed for tax periods with returns due by December 31, 2024. This applies to almost all tax types and to current Massachusetts taxpayers, taxpayers under audit, taxpayers desiring to file amended returns and non-filers. Non-filers may be eligible for a three-year lookback period. Please note that taxpayers with existing liabilities may receive a letter from the state.

    Overview

    To have penalties waived, you must:

    • Be an eligible taxpayer
    • Submit an Amnesty Request on MassTaxConnect beginning November 1
    • Pay all tax and interest included in the Amnesty Request
    • File all required returns with DOR by December 30, 2024

    Eligibility

    An Amnesty Request can be submitted if a taxpayer has a tax liability related to:

    • Unfiled returns, underreported tax and/or other unpaid assessments
    • A current audit that will result in an assessment of penalties
    • Pending Resolution, Appellate Tax Board and Collection cases

    Note: Non-filers may be eligible for a three-year limited look-back period.

    Eligible taxpayers include:
    • Personal income taxpayers
    • Corporate excise
    • Trust
    • Estates

    See a full list of eligible and ineligible account (tax) types.

    Who Is Not Eligible

    Taxpayers are ineligible if:

    • They received prior amnesty relief in 2015 or 2016 for the same tax type and period
    • They are seeking a waiver of penalties related to a tax that was already paid
    • They are seeking a refund of tax or a credit for an overpayment
    • They are under tax-related criminal investigation or prosecution
    • They are in active bankruptcy
    • They are, or have been, the subject of a tax-related criminal investigation or prosecution, who filed a false or fraudulent return, statement, or fraudulent amnesty return

    Filing Periods

    An Amnesty Request can be submitted for all filing periods with a return due on or before December 31, 2024.

    How to Prepare

    • Taxpayers who have an eligible existing tax liability will receive an Amnesty Eligibility Letter. To submit an amnesty request, they will simply need to provide their personal information, the Letter ID and a valid payment method (e.g., bank account information, credit card).
    • Taxpayers who are filing a new return to report a tax due will need to complete their return to calculate the amount due. Once completed, they can complete their Amnesty Request using the information from the return. They should either e-file or mail their completed return after they submit the Amnesty Request.
    • Taxpayers who are filing an amended return to report an increase in tax will need to complete their amended return to calculate the amount due. Once completed, they will need to sign on to their MassTaxConnect account to complete their Amnesty Request using the information from the amended return. They should either e-file or mail their amended return after they submit the Amnesty Request.

    It is important to note that taxpayers can only submit one Amnesty Request per account type, but the request can include multiple periods. Additionally, to request amnesty for multiple account types, taxpayers must submit a separate Amnesty Request for each account type.

    Existing Liabilities

    DOR will send an Amnesty Eligibility Letter to taxpayers with an existing tax liability, including liabilities resulting from a closed audit.

    To request amnesty, starting November 1, taxpayers with an Amnesty Eligibility Letter will enter the Amnesty Letter ID to verify their Amnesty Request and pay the total amount of tax and interest* shown on MassTaxConnect by December 30, 2024.

    *Note: additional interest may have accrued since the date of the Amnesty Eligibility Letter. It’s recommended that taxpayers pay the tax and interest shown when submitting the Amnesty Request.

    Amended Returns

    Taxpayers who underreported their tax liability on their original return and would like to request amnesty for the amount of the underreporting should:

    • Submit an Amnesty Request on MassTaxConnect
    • Indicate that the Request is for an Amended Return
    • Enter the tax liability based on the amended return calculation
    • Pay the total amount of tax and interest shown on MassTaxConnect
    • File an amended return to increase their tax by December 30, 2024

    Taxpayers must file their amended return(s) through standard channels.

    Non-filers and First-time Filers

    Taxpayers who determine that they were subject to Massachusetts taxation but failed to file a return* will be required to:

    • Submit an Amnesty Request on MassTaxConnect starting November 1
    • Indicate that the Request is for a New Tax Liability
    • Enter the tax liability based on the return calculation
    • Pay the total amount of tax and interest shown on the Amnesty Request
    • File the original return electronically by December 30, 2024:
      • On MassTaxConnect or
      • Through third-party software (Modernized e-File)

    Taxpayers can file on paper if they cannot e-file, unless mandated to e-file.

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

    *Eligible non-filers who have not been previously contacted by DOR may be eligible for a three-year limited look-back period, meaning they would only be required to file returns and pay all tax and interest due for returns due from January 1, 2022, through December 31, 2024, without regard to extension.

    Taxpayers Under Audit

    Taxpayers with an open audit should contact their assigned auditor at DOR to discuss amnesty. Taxpayers will need to:

    • Agree to the audit adjustment
    • Submit an Amnesty Request on MassTaxConnect starting November 1
    • Indicate that the Request is for either an Amended Return or a New Tax Liability
    • Enter the tax liability based on the audit calculation
    • Pay the total amount of tax and interest shown on MassTaxConnect
    • File a return to report the additional tax by December 30, 2024

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

    Amnesty Determination Notice

    DOR will issue a determination letter for each account/tax type when the taxpayer’s Amnesty Request has been approved, denied or approved for certain periods but denied for others.

    Amnesty approval will only be granted for periods where eligible taxpayers have submitted an Amnesty Request on MassTaxConnect, paid the total tax and interest due and filed all required returns by December 30, 2024.

    If an Amnesty Request is denied, any payments made will be applied to outstanding liabilities.

    For more information, please contact:

    Brian Strahle, Tax Partner & National SALT Practice Leader | brian.strahle@frazierdeeter.com

    Anna Cronic, SALT Senior Manager | anna.cronic@frazierdeeter.com

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