News and Insights

Massachusetts Tax Reporting News: Voluntary Disclosure and Amnesty Programs

Tax Development Mar 09, 2016

Pilot Voluntary Disclosure Program
In order to expedite tax disputes, the Massachusetts Department of Revenue (“DOR”) has announced a new pilot Voluntary Disclosure Program (“Program”) for uncertain tax issues. All business taxpayers with a potential uncertain tax liability of at least $100,000, excluding interest and penalties, are eligible for the Program. Uncertain tax issues have no clear statutory guidance, case law, or DOR regulations, letter rulings, or other public statements. The issues also cannot have been addressed as part of a prior audit, application for abatement, or amended return filed by the taxpayer or a prior ruling.

Such taxpayers may anonymously contact the DOR describing the uncertain tax issues and see if their matter qualifies. The DOR has 30 days to review the information and notify the taxpayer if the matter has been accepted into the disclosure program. If the DOR accepts, the taxpayer has 45 days to disclose its identity and submit further application and information to the DOR to work out a settlement. As part of the acceptance letter, the taxpayer needs to include a settlement proposal, which the DOR will review and prepare a recommendation. Both parties will be able to discuss and negotiate a final settlement. For information on application requirements once accepted into the Program, please refer to Massachusetts Administrative Procedure 637 (AP 637).

Tax Amnesty 2016
Also, the Massachusetts 2016 Tax Amnesty Program will be from April 1–May 31 for all sales types administered by the DOR (except the Preferred Provider excise and taxes under the International Fuels Tax Agreement). Eligible individuals or businesses are those that are not currently registered with the DOR, have not filed a tax return, or have not fully reported tax owed on a previously filed return for any tax return due on or before December 31, 2015. However, individuals or businesses that are currently or have been the subject of a tax-related criminal investigation or prosecution, have previously filed a false/fraudulent return or statement, or file a fraudulent amnesty return are not eligible for the amnesty.

The 2016 amnesty program allows taxpayers to file delinquent returns or amend prior tax filings based on a three-year lookback period. Also, penalties and any interest owed on the penalties will be waived—taxpayers only pay the outstanding tax and interest.

This 2016 amnesty program does not cover existing tax liabilities. Further, taxpayers who participated in either the 2014 or 2015 tax amnesty program are not eligible for the same tax types or tax periods for this 2016 amnesty program.


Jeremiah T. Lynch