Guide to Taxes
Administrative
Tax - Federal Change
Federal Change
Abatement Resulting from IRS Audit or
Massachusetts Amended Return to Reflect Federal
Amended Return, Including:
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2004 Law
Change to Revise the Definition of Final
Determination by The Federal Government
If, as a result of a change by the federal
government in a taxpayer's federal taxable
income, a taxpayer believes that a lesser tax
was due the Commonwealth than was previously
paid, the taxpayer may apply to the Commissioner
of Revenue for an abatement by submitting a
Form CA-6, Application for Abatement/Amended
Return, within one (1) year of the date
of notice of the final determination by the
federal government. The one year rule also
applies to a final determination of a change
made by the IRS, which was initiated by the
filing of an amended federal return by the
taxpayer. For further information, see Chapter
485 of the Acts of 1998.
2004 Law Change
to Revise the Definition of Final Determination
by The Federal Government. New Definition
Effective as of January 1, 2004:
A final federal determination means there is no
further administrative or judicial appeal.
Changes in federal taxable income resulting from
a closing agreement, an offer in compromise or
any similar agreement executed on or after
January 1, 2004 constitute a final determination
of a change by the federal government. An
agreement may constitute a final determination
whether or not any audit or other review is
complete with respect to issues not addressed in
the agreement.
Since a taxpayer has one (1) year to file, it is
usually wise to wait for the Notice of Final
Determination from the IRS before filing an
amended Massachusetts return.
Prior Law:
Changes in federal taxable income resulting from
a an offer in compromise or a similar agreement
executed before January 1, 2004 did not
constitute a final determination of a change by
the federal government.
Final Determination by The Federal
Government:
Prior to the law change, DOR Regulation 830 CMR
62C.30.1 already listed closing agreements as an
example of a determination by the federal
government. Thus closing agreements resulting in
a change in federal taxable income executed
prior to January 1, 2004 may also be considered
final determinations.
Documentation to Submit with
Abatement/Amended Tax Return:
Federal Change Abatement Resulting from
IRS Audit:
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All relevant
Massachusetts and federal schedules that
will substantiate the federal change;
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Explanation of
any differences between Massachusetts and
federal taxable income;
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Copy of IRS
documents (if available) such as:
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Signed and
dated Federal Revenue Agent Report -
Form 4549; or
-
Refund
check from the IRS; or
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Any
additional federal documents showing the
IRS final determination of federal
taxable income.
Massachusetts Amended Return to Reflect
Federal Amended Return:
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For
personal income, copy of Form 1040 -
U.S. Individual Income Tax Return and Form
1040X - Amended Individual Income Tax
Return;
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For
corporate excise, copy of 1120X;
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All relevant
Massachusetts and federal schedules that
will substantiate the federal change;
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Explanation of
any differences between Massachusetts and
federal taxable income;
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Copy of IRS
documents (if available) such as:
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Signed and
dated IRS Acceptance Letter - Form 8488;
or
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refund
check from the IRS; or
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Any
additional federal documents showing the
IRS final determination of federal
taxable income.
Note:
in some instances, where there are complex
issues involved, DOR will wait for the IRS
acceptance letter.
Massachusetts
References:
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M.G.L. Chapter
62C, Section 30, as amended by St. 2003, c.
143, s. 1
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Chapter 485 of
the Acts of 1998, "An Act Reforming the Tax
Laws of the Commonwealth" (ATB and
Administrative Reform memorandum)
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