Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. Eligible taxpayers will be able to file delinquent or amended returns to take advantage of the program. This allows taxpayers to pay any outstanding tax and interest in exchange for the commissioner waiving most penalties.
When Does the Program Start?
The program will run from November 1, 2024, through December 30, 2024. This gives eligible taxpayers a short window to take advantage of the program before it expires at the end of the year.
Who is Eligible?
The amnesty program is available to any individual, business, trust, or estate not excluded under Section VII.A. This includes taxpayers who:
- Have failed to file a Massachusetts Tax Return due before December 31, 2024, or have not reported the full amount of tax properly due on previously filed tax returns before 2024-year end.
- Have filed an incorrect or insufficient Massachusetts return or has an assessment issued by the Commissioner of one of the following types:
- An unpaid and self-assessed tax liability before December 30, 2024; or
- A tax liability assessed by the Commissioner that remains unpaid on or before December 30, 2024.
All tax types (including sales, use, meals, and room occupancy) are eligible except for a few types. These include the deeds excise, abandoned bottle deposit, jet fuel excise, paid family and medical leave contributions, underground storage tank delivery fee, and health care coverage penalties.
Taxpayers who are participating in payment agreements currently will also be able to take advantage of the program. Any penalties already associated with the payment agreement plan will not be waived.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits to taxpayers. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, such as late filing and late payment penalties on most types of tax. Note the commissioner does not have the authority to waive interest.
The program also includes a limited look-back period for eligible non-filers who choose to participate. This look-back is limited to a three-year window which means taxpayers who have failed to file or pay taxes that were due before January 1, 2022. Eligible taxpayers will not be required to file or pay any taxes due for periods before January 1, 2022, if they participate in the amnesty program. The Massachusetts DOR will also not initiate any audits for those periods.
Procedures
In general, the DOR will issue letters (Tax Amnesty Eligibility Letter) to eligible taxpayers with existing tax liabilities, interest or penalties. Taxpayers who do not receive the letter will still be eligible if they meet the requirements listed in section III of the program.
All requests must be submitted via the MassTaxConnect portal. The request must be submitted by tax type, and multiple requests can be submitted during the period. Proper documentation, including unfiled tax returns for all applicable tax types, must be submitted electronically.
Limitations
The Amnesty program has a few limitations as to who can participate. This includes taxpayers already in any litigation process with the Commissioner, those seeking refunds of overpayments, taxpayers who submitted fraudulent amnesty requests, those who do not owe any Massachusetts taxes, taxpayers who have already entered into a settlement agreement with the Commissioner, taxpayers who have previously been granted amnesty with respect to the same tax type, or those who are in bankruptcy.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it is important to act quickly, as the program is only available for a limited time during the 60-day window starting November 1st through December 30th. You can read more about the Amnesty program in this article.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here.