The Massachusetts Department of Revenue (Department) announced its plan to implement an Amnesty Program from November 1st thru December 30, 2024. During this time, the Department will waive most penalties for eligible taxpayers who file all of their outstanding returns and pay the tax and interest due by December 31, 2024.
“I urge individuals and businesses to take this opportunity to voluntarily pay their back taxes and interest beginning November 1. ”
amnesty programs
Typically, amnesty programs are a form of penalty waiver programs offered by state Departments of Revenue for taxpayers to come forward and become compliant on missed or past due returns and unpaid tax, and receive a waiver of related penalties. Additionally and depending on the specific provisions of an individual amnesty program, a percentage of applicable interest may also be waived.
While such programs benefit taxpayers, state treasuries benefit as well. For example, Massachusetts will collect approximately $100M in previously unreported tax liability from the program, in addition to the increased tax remittances of newly registered taxpayers that will timely file and remit tax prospectively.
Eligibility requirements for amnesty programs vary. For Massachusetts’ Program, taxpayers are eligible if they have a tax liability related to (1) “unfiled returns, underreported tax, and/or other unpaid assessments,” (2) “a current audit that will result in an assessment of penalties,” or (3) “Pending Resolution, Appellate Tax Board, and Collection cases.” Ineligible taxpayers include those who are seeking a waiver of penalties for tax that has already been paid and taxpayers seeking a refund of tax or a credit for an overpayment.
The tax types eligible for their current Amnesty Program include personal income tax and state tax for individuals, sales and use tax, wage withholding tax, and corporate excise tax for businesses.
Application process
Applying for Massachusetts’s Amnesty Program depends on your specific situation and tax type. If you have an existing tax liability that is eligible for amnesty, the Department will proactively send an Amnesty Eligibility Letter with next steps.
If you are a non-filer who needs to file a new return and report tax due, you will need to complete the return to calculate the appropriate tax due. Once you’ve completed the return, complete the Amnesty Request before submitting your return. Use the completed return to fill out the Amnesty Request, then e-file or mail your completed return to the Department.
If you are filing an amended return to report an increase in tax, complete your amended return to calculate how much tax you owe. Then, complete the Amnesty Request using your MassTaxConnect return. After you submit your amended return, e-file or mail your return.
Taxpayers with an open audit should contact their assigned auditor to discuss potential amnesty eligibility.
business benefits
State amnesty programs can greatly benefit businesses with unfiled returns and unpaid tax liability. However, eligibility requirements can be confusing, and it is imperative to follow the appropriate steps for applying to an amnesty program to avoid disqualification.
For a list of current state amnesty programs or for assistance with an eligibility determination or application process, contact Libertas and let your business reap the benefits.