Massachusetts Offers Tax Amnesty Program

By Leanne Scott October 11, 2024

Co-authored by Leanne Scott & Lori Paci.

The fiscal year 2025 Massachusetts budget calls for a sixty (60) day tax amnesty program – a method by which eligible overdue/unfiled tax returns, as well as certain other pending items, can be filed or resolved without assessment of penalties that otherwise normally would apply. It has been estimated that this tax amnesty program will raise $100 million of revenue for the Commonwealth.

Massachusetts tax amnesty program general information

The Department of Revenue (“the Department”) recently unveiled a website and FAQs dedicated to this program, announcing that the program will run from November 1 through December 30 of 2024. Eligible taxpayers can include individuals, businesses, trusts, and estates.  Most, but not all, tax types are eligible as well. For more information, see here.

In order to participate, one must be an eligible taxpayer applying for an eligible tax type. Amnesty Requests will be accepted exclusively online via MassTaxConnect. All tax and interest must be paid, and all required tax returns must be filed by December 30, 2024, in order to successfully qualify to participate and have applicable penalties waived.

Amnesty requests can be submitted by or on December 30, 2024, for all filing periods for which returns were or will be due on or before December 31, 2024. In general, eligible taxpayers who have not previously been contacted by the Department may be allowed to use a three-year lookback period for purposes of this program, meaning that underlying returns, tax, and interest would be required for any returns due between January 1, 2022, and December 31, 2024 (without regard to extensions), but not before that.

Taxpayers with existing liabilities known to the Department will receive Amnesty Eligibility Letters. Those who are coming forward voluntarily to either file new returns reporting tax due or amending returns to report an increase in tax will need to submit a request online and either electronically file or mail their returns, as required.

Importantly, this program is open to those with items pending resolution before the Department, the Appellate tax Board, or in collections. Taxpayers currently under audit should contact their assigned auditor to discuss the program. Those who should participate, but choose not to, may be barred from participating in any similar programs offered during the next ten (10) years.

It has been several years since Massachusetts offered a program of this nature. Amnesty programs can often be open to a broader range of participants than traditional voluntary disclosure agreement (VDA) programs, and can be quite beneficial for taxpayers, as well as for the state in terms of bringing in additional revenue.

The link to participate in the program will be available starting November 1. The Department also plans to post video tutorials to help taxpayers navigate this process.

Potentially beneficial scenarios

We are frequently asked who can benefit from participation in this program. Here are a few examples:

• Those who are generally aware of potentially eligible prior period liabilities in Massachusetts who were considering applying for a VDA
• Taxpayers who are registered with the Department for a particular tax type, but may have underpaid their taxes
• Businesses who may have prior period liabilities or reserves and who may be contemplating an exit strategy (i.e., sale, merger) or new investment potentially requiring due diligence
• Businesses or individuals who might be ineligible for the traditional VDA program, or for its full range of benefits.  Examples include Massachusetts resident individuals; those who have received notices from the Department of otherwise been contacted; and businesses with significant a presence in the Commonwealth who might otherwise be  subject to a seven (7) vs. three (3) year lookback period – see Technical Information Release 11-1
• Individuals who have purchased items abroad for use in Massachusetts and failed to remit required use tax and who may be concerned about U.S. Customs sharing information with the Department

If you would like to discuss this program, or any other state and local tax matters in more detail, please contact Leanne Scott or your preferred BNN tax advisor at 800.244-7444.