▸Intro / Preamble
Chapter 62C of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by striking out section 37A and inserting in place thereof the following section:--
▸SECTION 37A
(a)(1) The commissioner may enter into an agreement in writing with any taxpayer, or duly authorized agent or representative of the taxpayer, relating to the liability of the taxpayer in respect of any tax for any tax period ending prior to the date of the agreement.
(2) The agreement shall be final and conclusive and, except upon a showing of fraud or mutual mistake of a material fact, the case shall not be reopened as to the matters agreed upon, or the agreement modified, by any employee or agent of the commonwealth. The agreement shall be in writing to include the names of all parties, the amount and type of tax, interest, penalties and charges settled, and the amount actually paid in accordance with the terms of the settlement. Any amount assessed that is not collected pursuant to the provisions of this section shall be abated by the commissioner.
(3) Prior to making a settlement offer, a taxpayer must be in compliance with filing requirements for all tax years. A taxpayer is “in compliance” when all income tax returns have been filed, whether or not timely, or when, in the absence of a return, an assessment issued by the department under its authority is considered correct and final.
(b) A compromise may be entered into if there is a doubt as to liability, doubt as to collectability, or the possibility to promote effective tax administration. Doubt as to liability exists where there is a genuine dispute as to the existence or amount of the correct tax liability under the law. Doubt as to liability does not exist where the liability has been established by a final court decision or judgment concerning the existence or amount of the liability. Doubt as to collectability exists in any case where the taxpayer's assets and income are less than the full amount of the liability. Effective tax administration is promoted where compelling public policy or equity considerations provide a basis for compromising the liability, or where due to exceptional circumstances, collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner.
(c) The commissioner shall prescribe guidelines to determine whether the offer is adequate and should be accepted to resolve a dispute.
(1) In prescribing guidelines, the commissioner may develop and publish its own schedules of allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for the taxpayer's (and his or her family's) health and welfare and/or production of income, or the commissioner may rely on the existing standards used by the Internal Revenue Service collection financial standards.
(2) The guidelines shall provide that the commissioner determine, on the basis of the facts and circumstances of each taxpayer, whether the use of the schedules published under subparagraph (A) is appropriate and shall not use the schedules to the extent such use would result in the taxpayer not having adequate means to provide for basic living expenses.
(d) (1) The commissioner may require as a condition of compromising the liability a period of up to 3-year future compliance period during which the taxpayer must file all tax returns that are due and must pay all amounts that have been assessed. The taxpayer must pay the amounts that have been assessed within 90 days of the date of the assessment unless paragraph (2) of this subsection applies. This 3-year compliance period begins when the taxpayer makes final payment of the amount offered.
(2) The taxpayer is not required to pay all amounts due within 90 days of the date they are assessed if the taxpayer files an appeal within 90 days of the assessment date. A taxpayer who files an appeal within 90 days of the assessment date must pay all amounts that are determined to be due within 90 days after the taxpayer’s appeal rights have been exhausted or have expired and the liability has become final.
(e) (1) A “lump-sum offer” is an offer of payments to be made in 5 or fewer installments.
The submission of any lump-sum offer-in-compromise shall be accompanied by the payment of 10 percent of the amount of such offer.
(2) A periodic payment offer is an offer of payments to be made in 36 or fewer installments. The submission of any periodic payment offer-in-compromise shall be accompanied by the payment of the amount of the first proposed installment. Taxpayers who fail to make the promised periodic payments after an offer-in-compromise is accepted shall be notified of the nonpayment and given a reasonable time to bring the account up to date.
(f) The commissioner shall not reject an offer-in-compromise solely on the basis of the amount of the offer.
(g) Any tax liability settlement under this section which proposes to accept an amount which is fifty thousand or more dollars less than the full amount owed by the taxpayer shall be submitted to the Attorney General for review.
(h) The commissioner shall establish procedures:
(1) that require presentation of a counteroffer or a written rejection of the offer by the commissioner if the amount offered by the taxpayer in an offer, be it a lump sum or periodic payments, is not accepted by the commissioner;
(2) for an independent administrative review of any written rejection of a proposed offer or installment agreement made by a taxpayer under this section before the rejection is communicated to the taxpayer;
(3) that allow a taxpayer to appeal any rejection of the offer to the Office of Appeals; and
(4) that provide for notification to the taxpayer when an offer has been accepted, and issuance of certificates of release of any liens related to the liability which is the subject of the compromise.
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Chapter 62C of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by striking out section 37A and inserting in place thereof the following section:--
Section 37A. (a)(1) The commissioner may enter into an agreement in writing with any taxpayer, or duly authorized agent or representative of the taxpayer, relating to the liability of the taxpayer in respect of any tax for any tax period ending prior to the date of the agreement.
(2) The agreement shall be final and conclusive and, except upon a showing of fraud or mutual mistake of a material fact, the case shall not be reopened as to the matters agreed upon, or the agreement modified, by any employee or agent of the commonwealth. The agreement shall be in writing to include the names of all parties, the amount and type of tax, interest, penalties and charges settled, and the amount actually paid in accordance with the terms of the settlement. Any amount assessed that is not collected pursuant to the provisions of this section shall be abated by the commissioner.
(3) Prior to making a settlement offer, a taxpayer must be in compliance with filing requirements for all tax years. A taxpayer is “in compliance” when all income tax returns have been filed, whether or not timely, or when, in the absence of a return, an assessment issued by the department under its authority is considered correct and final.
(b) A compromise may be entered into if there is a doubt as to liability, doubt as to collectability, or the possibility to promote effective tax administration. Doubt as to liability exists where there is a genuine dispute as to the existence or amount of the correct tax liability under the law. Doubt as to liability does not exist where the liability has been established by a final court decision or judgment concerning the existence or amount of the liability. Doubt as to collectability exists in any case where the taxpayer's assets and income are less than the full amount of the liability. Effective tax administration is promoted where compelling public policy or equity considerations provide a basis for compromising the liability, or where due to exceptional circumstances, collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner.
(c) The commissioner shall prescribe guidelines to determine whether the offer is adequate and should be accepted to resolve a dispute.
(1) In prescribing guidelines, the commissioner may develop and publish its own schedules of allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for the taxpayer's (and his or her family's) health and welfare and/or production of income, or the commissioner may rely on the existing standards used by the Internal Revenue Service collection financial standards.
(2) The guidelines shall provide that the commissioner determine, on the basis of the facts and circumstances of each taxpayer, whether the use of the schedules published under subparagraph (A) is appropriate and shall not use the schedules to the extent such use would result in the taxpayer not having adequate means to provide for basic living expenses.
(d) (1) The commissioner may require as a condition of compromising the liability a period of up to 3-year future compliance period during which the taxpayer must file all tax returns that are due and must pay all amounts that have been assessed. The taxpayer must pay the amounts that have been assessed within 90 days of the date of the assessment unless paragraph (2) of this subsection applies. This 3-year compliance period begins when the taxpayer makes final payment of the amount offered.
(2) The taxpayer is not required to pay all amounts due within 90 days of the date they are assessed if the taxpayer files an appeal within 90 days of the assessment date. A taxpayer who files an appeal within 90 days of the assessment date must pay all amounts that are determined to be due within 90 days after the taxpayer’s appeal rights have been exhausted or have expired and the liability has become final.
(e) (1) A “lump-sum offer” is an offer of payments to be made in 5 or fewer installments.
The submission of any lump-sum offer-in-compromise shall be accompanied by the payment of 10 percent of the amount of such offer.
(2) A periodic payment offer is an offer of payments to be made in 36 or fewer installments. The submission of any periodic payment offer-in-compromise shall be accompanied by the payment of the amount of the first proposed installment. Taxpayers who fail to make the promised periodic payments after an offer-in-compromise is accepted shall be notified of the nonpayment and given a reasonable time to bring the account up to date.
(f) The commissioner shall not reject an offer-in-compromise solely on the basis of the amount of the offer.
(g) Any tax liability settlement under this section which proposes to accept an amount which is fifty thousand or more dollars less than the full amount owed by the taxpayer shall be submitted to the Attorney General for review.
(h) The commissioner shall establish procedures:
(1) that require presentation of a counteroffer or a written rejection of the offer by the commissioner if the amount offered by the taxpayer in an offer, be it a lump sum or periodic payments, is not accepted by the commissioner;
(2) for an independent administrative review of any written rejection of a proposed offer or installment agreement made by a taxpayer under this section before the rejection is communicated to the taxpayer;
(3) that allow a taxpayer to appeal any rejection of the offer to the Office of Appeals; and
(4) that provide for notification to the taxpayer when an offer has been accepted, and issuance of certificates of release of any liens related to the liability which is the subject of the compromise.