Have you been audited by the Massachusetts Department of Revenue? Have you been assessed a tax liability by the Massachusetts Department of Revenue? Do you disagree with the tax assessment? This blog will provide context concerning your options once a tax has been assessed by the MDOR and a tax abatement request has been denied.
If you disagree with the tax assessment and have been unable to resolve the issue with the MDOR, your next step is to file a petition with the Massachusetts Appellate Tax Board.
MASSACHUSETTS APPELLATE TAX BOARD
The Massachusetts Appellate Tax Board (ATB) has original jurisdiction over disputes arising under the tax laws of the Commonwealth of Massachusetts. These disputes include individual income tax, corporate excise tax, property tax, sales/use tax, meals tax, and other excise taxes.
The majority of filings with the ATB concern parties aggrieved due to the Massachusetts Department of Revenue’s (MDOR) refusal to abate a tax. An appeal of the MDOR’s refusal/denial of an abatement claim must be filed with the ATB within sixty days of the MDOR’s notice of refusal/denial. The ATB is precluded from hearing an appeal that is filed after the statutory 60-day period.
Timelines for filing an abatement request with the MDOR are found within MGLc. 62C, §37. Under this section a party aggrieved by an assessment of tax can file a Massachusetts Form ATB with the MDOR requesting an abatement within:
Three years of the date of filing the return (this three-year period runs from the actual date of filing the return, and not the due date of the return);
Two years from the date the tax was assessed or deemed to be assessed (time period runs from the date of the notice of assessment not from the date of assessment);
One year from the date the tax was paid, whichever is later; or,
When the statute of limitations on assessment expires
FILING OF ATB PETITION
An ATB case begins by the timely filing of a petition. The petition is timely filed if it is filed within 60 days of the MDOR’s denial of the filed Form ATB. The petition is allowed to contain and raise new issues, legal theories, and facts that were not included within the abatement claim. Once the petition is filed with the ATB clerk, a copy of the petition with the stamped ATB docket number must be served upon the MDOR. The ATB must be provided within 10 days an acknowledgement by the Petitioner that such service was made upon the MDOR.
The fling fee with the ATB is based upon the amount of tax abatement being sought. The filing fee at the ATB is $0.10 per $100 of abatement sought, with a minimum filing fee of $65 and a maximum fee of $5,000. The filing fee is based upon the amount of abated tax being sought; interest and penalty accruals are not taken into account to determine the filing fee.
DISCOVERY and SETTLEMENT TALKS
Once the petition is filed, an ATB case moves forward similar to a case filed with the US Tax Court. Within 30 days of the petition filing the MDOR is required to file an Answer to the petition. The case will also move forward with discovery.
Both the Petitioner and the MDOR are allowed to serve Interrogatory requests upon the other party. The purpose of the interrogatories is to find facts and documents admissible into evidence at the ATB hearing. The number of interrogatories is limited to thirty and the facts/documents sought must be admissible. This admissible standard within the ATB is a stricter standard than the rule in other Massachusetts court jurisdictions.
A party can also request depositions be taken. However, under the ATB rules a party can only request a deposition with permission of the ATB. Such motions requesting a deposition are routinely allowed by the ATB. Parties now routinely assent to a motion filing requesting leave for the taking of a deposition.
Other forms of discovery allowed by the ATB are Requests for Admissions and Requests for the Production of Documents. Once again, the document requests must be for documents that would be admissible during the ATB hearing.
Once the petition is filed an attorney for the MDOR will be assigned. Petitioner’s counsel and MDOR counsel will routinely work towards settling the matter prior to an ATB hearing occurring. These settlement discussions can be held overtime, with documents and proposals being exchanged back and forth between parties. The MDOR attorney will take into account the facts of the case, the strength of the Petitioner’s case, and the potential cost of litigating the matter compared to the settlement proposal. In our experience here at Lake Shore Legal, staunch and knowledgeable advocacy for the Petitioner during these exchanges will in most cases lead to settlement prior to the occurrence of a hearing.
ATB HEARING
If the petition moves to a hearing, the hearing is routinely before a single member of the ATB. The hearing will include oral testimony, documentary evidence, and exhibits from both the Petitioner and the MDOR. Counsel will also file ATB trial briefs and requests for findings of fact prior to the hearing or after the hearing.
Following the hearing and the brief filings the ATB will take the matter under advisement. A decision must be made within six months from the close of the record (normally when the final briefs are filed with the ATB). In most matters, the ATB’s finding will be brief and state which party the ATB has found for. If the ATB has found for the MDOR, the Petitioner must pay the liability within 30 days of the decision. A party can file within 10 days of the decision a request for written findings of fact and reports. This will require the ATB to issue a written opinion explaining the ATB’s decision. The losing party can appeal the ATB decision within 60 days of the decision. However, the decision of the ATB is final as to findings of fact. On appeal, the appealing party must demonstrate that the ATB decision was based upon an error of law or not supported by substantial evidence.
LAKE SHORE LEGAL, LLC
Attorneys at Lake Shore Legal have vast experience handling matters before the MDOR and ATB. Our attorneys offer knowledge and experience that is vital to success before both the MDOR and ATB. Such experience can be crucial for success at the initial Form ATB filing with the MDOR requesting abatement of the assessed tax, to preparation of an ATB petition, to advocacy for settlement with an MDOR attorney, to proper and vigorous representation at an ATB hearing.
Contact Lake Shore Legal today and speak with one of our attorneys concerning your MDOR tax issue. Lake Shore Legal will review the facts of your matter, explain your options, review time limits for filings, and explain the process moving forward. Contact Lake Shore Legal today. info@lakeshorelegalsolutions.com (508) 943-7800