Massachusetts S 1885: An Act improving the tax administrative laws of the Commonwealth

Bill Text

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SENATE DOCKET, NO. 1879 FILED ON: 1/20/2023
SENATE . . . . . . . . . . . . . . No. 1885

The Commonwealth of Massachusetts
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PRESENTED BY:
Michael O. Moore
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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act improving the tax administrative laws of the Commonwealth.
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PETITION OF:

NAME: DISTRICT/ADDRESS:
Michael O. Moore Second Worcester

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SENATE DOCKET, NO. 1879 FILED ON: 1/20/2023
SENATE . . . . . . . . . . . . . . No. 1885
By Mr. Moore, a petition (accompanied by bill, Senate, No. 1885) of Michael O. Moore for
legislation to make certain changes in the administrative tax laws of the Commonwealth.
Revenue.

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE SENATE, NO. 1932 OF 2021-2022.]

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)
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An Act improving the tax administrative laws of the Commonwealth.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:

1 SECTION 1. Chapter 62C of the General Laws is hereby amended by striking out section
2 3A, as appearing in the 2020 Official Edition, and inserting in place thereof the following
3 section:-
4 Section 3A. In applying the laws referred to in section 2, the commissioner may, in his
5 discretion, disallow the asserted tax consequences of a transaction by asserting the application of
6 the sham transaction doctrine or any other related tax doctrine, in which case the taxpayer shall
7 have the burden of demonstrating that the transaction possessed both: (i) a valid, good-faith
8 business purpose other than tax avoidance; and (ii) economic substance apart from the asserted
9 tax benefit.

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10 In the case of an individual, this section shall apply only to transactions entered into in
11 connection with a trade or business or an activity engaged in for the production of income.
12 This section is not intended to alter the tax treatment of basic business transactions that
13 have been respected at common law, merely because the choice between meaningful economic
14 alternatives is based on comparative tax advantages. These basic transactions shall include but
15 not be limited to (1) the choice between capitalizing a business enterprise with debt or equity; (2)
16 the choice between using a corporation organized in Massachusetts or elsewhere; (3) the choice
17 of entity; (4) the choice to enter a transaction or series of transactions that constitute a corporate
18 organization or a reorganization governed for federal income tax purposes by Section 368(a)(1)
19 of the Code; and (4) the choice to use a related-party entity in a transaction, if the arm’s length
20 standards of Section 482 of the Code and of Section 39A of chapter 63 and other applicable
21 concepts are satisfied.
22 Nothing in this section shall be construed to limit or negate the commissioner’s authority
23 to make tax adjustments as otherwise permitted by law.
24 SECTION 2. The second paragraph of section 19 of chapter 62C of the General Laws, as
25 so appearing, is hereby amended by striking out the first sentence and inserting in place thereof
26 the following sentence:- An extension of six months for filing any return required by section
27 eleven or twelve shall be allowed any corporation if, in such manner and at such time as the
28 commissioner may prescribe, such corporation files a request, in such form as the commissioner
29 may require, and pays, on or before the date prescribed for payment of the tax, the amount of tax
30 reasonably estimated to be due under this chapter; but this extension may be terminated at any
31 time by the commissioner by mailing to the corporation notice of such determination at least ten

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32 days prior to the date for termination fixed in such notice; provided, further that in the case of
33 taxpayer subject to section 32B of chapter 63 that is required to file a return required by section
34 11 or 12, an extension of seven months for filing such return shall be allowed.
35 SECTION 3. Section 37C of chapter 62C of the General Laws, as so appearing, is hereby
36 amended by adding the following subsection:-
37 (g) If the commissioner, considering the provisions of paragraph (a), fails to accept an
38 offer of the taxpayer of 35 percent or more of the assessed liability in full in final settlement and
39 the appellate tax board finds for the taxpayer, the commissioner shall pay the taxpayer
40 reasonable attorney fees not to exceed 20 percent of the assessed amount, and any interest
41 otherwise due.
42 SECTION 4. Section 3 of chapter 63B of the General Laws, as appearing in the 2018
43 Official Edition, is hereby amended by striking out subsection (c) and i