Bill
S 2027
Allows the Commissioner of Revenue to settle tax liabilities for disputed or uncollectible periods through written offers, with defined processes, limits, and safeguards.
Note on sources and discrepancies
- The provided bill text is a Massachusetts-style amendment to Chapter 62C, §37A (state tax law) titled “An Act providing for settlements of tax liability.” Some of the surrounding metadata (alternate titles, sponsors from different jurisdictions, and assorted legislative actions) appear inconsistent or from other bills/jurisdictions. This summary is based on the bill text supplied (the amendment to Chapter 62C §37A). Verify the correct jurisdiction and docket entry before relying on this summary for legal or procedural action.
Purpose and intent
- Authorizes the Commissioner of Revenue to enter written compromise agreements (offers-in-compromise) with taxpayers to settle tax liabilities for tax periods ending before the agreement date, and establishes procedures, standards, and limits for such settlements. The goal is to provide a structured process to resolve disputed or uncollectible tax liabilities and to promote effective tax administration.
Key provisions and changes
- Authority to compromise: Commissioner may enter written settlement agreements with taxpayers or their authorized agents for pre-agreement tax periods.
- Finality: Settlements are final and conclusive and cannot be reopened or modified except for fraud or mutual mistake of material fact. Agreements must be written and list parties, tax types, amounts of tax/interest/penalties settled, and amount paid. Any assessed amounts not collected under the settlement are to be abated.
- Filing compliance prerequisite: Taxpayers must be in compliance with filing requirements (all returns filed, or assessments treated as final) before submitting a settlement offer.
- Grounds for compromise: Settlements permitted where there is (a) doubt as to liability (genuine legal dispute), (b) doubt as to collectability (assets/income insufficient to pay full liability), or (c) to promote effective tax administration (public policy/equity or to preserve public confidence).
- Guidelines and standards: Commissioner to prescribe guidelines to evaluate offers. Commissioner may publish allowance schedules for basic living and income-production needs or rely on IRS collection financial standards. Guidelines must be applied to ensure taxpayers retain adequate means for basic living expenses.
- Compliance period: Commissioner may require up to a 3-year future compliance period (must file returns and pay assessed amounts). Generally assessed amounts must be paid within 90 days unless the taxpayer timely appeals; then payments are due within 90 days after appeal rights are exhausted and liability is final.
- Payment types and deposits:
- Lump-sum offers: up to 5 installments; submission requires payment of 10% of the offered amount.
- Periodic offers: up to 36 installments; submission requires payment of the first proposed installment.
- Nonpayment after acceptance triggers notice and a reasonable cure period.
- Limit on rejection basis: Commissioner may not reject an offer solely because of the amount offered.
- Attorney General review: Any settlement that accepts an amount $50,000 or more less than the full liability must be submitted to the Attorney General for review.
- Procedural requirements:
- Commissioner must provide a counteroffer or written rejection if an offer is not accepted.
- Independent administrative review must occur for written rejections before communicating the rejection to the taxpayer.
- Taxpayers may appeal a rejection to the Office of Appeals.
- Accepted offers trigger taxpayer notification and issuance of lien release certificates for liens related to the compromised liability.
Who is affected
- Taxpayers with disputed or uncollectible Massachusetts tax liabilities (or the state's equivalent jurisdiction if enacted).
- The state Department/Commissioner of Revenue (administration, collection, and rulemaking).
- The Attorney General (required review for large dollar concessions).
- The Office of Appeals (appeals process).
- State revenues and budgeting — settlements could reduce collectible revenue in individual cases but may increase net collections by resolving otherwise uncollectible claims.
Procedural/timeline notes
- Offers require the taxpayer be current on filing prior years’ returns.
- Payment timelines: 90-day rule for assessed amounts (subject to appeals) and up to 3-year compliance periods following final payment.
- Written agreements and administrative review steps required before final rejection communicated.
Potential impacts
- Provides a clearer statutory framework for offers-in-compromise, increasing predictability for taxpayers and the revenue agency.
- May improve collection outcomes by enabling compromise where full collection is unlikely or inequitable.
- Places safeguards (guidelines, appeals, AG review for large concessions) to balance revenue protection with taxpayer relief.
- Administrative burden: requires the Commissioner to issue guidelines, run review procedures, and coordinate AG review for large settlements.
Recommendation
- Confirm the bill’s jurisdiction and official docket before citing or acting on this summary, because accompanying metadata included inconsistent titles, sponsors, and legislative actions.
Compiled from official sources — confirm details with the bill’s official record.
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