Section 26: Assessment of taxes
Section 26. (a) Taxes shall be deemed to be assessed at the amount shown as the tax due upon any return filed under the provisions of this chapter and on any amendment, correction or supplement thereof, or at the amount properly due, whichever is less, and at the time when the return is filed or required to be filed, whichever occurs later.
(b)(1) If the commissioner determines, from the verification of a return or otherwise, that the full amount of any tax has not been assessed or is not considered to be assessed, the commissioner may, at any time within 3 years after the date the return was filed or the date it was required to be filed, whichever occurs later, assess the same with interest as provided in section 32 to the date when the deficiency assessment is required to be paid, first giving notice of the commissioner's intention to the person to be assessed; provided, however, that said 3-year period for making an assessment shall be suspended during the period of time that the taxpayer has a bankruptcy case pending under the appropriate chapters of Title 11 of the United States Code. The taxpayer or the taxpayer's representative may confer with the commissioner or the commissioner's duly authorized representative as to the proposed assessment within 30 days after the date of such notification. After the expiration of 30 days from the date of such notification, the commissioner shall assess the amount of tax remaining due to the commonwealth, or any portion thereof, which the commissioner believes has not been assessed.
(2) In the case of 1 or more corporations that participated or were required to participate in a filing through the means of a combined report under section 32B of chapter 63, the commissioner may effect the issuance of a notice of the intention to assess or a notice of assessment to each corporation that participated or was required to participate in the combined report with respect to any tax liability due from such corporation under said chapter 63, whether relating to the income measure or non-income measure of the corporate excise or minimum excise tax liability, by issuing a single notice to the principal reporting corporation on its own behalf and as the agent for each corporation that is being assessed. The single notice shall state the net cumulative liability of all such assessed corporations. In such cases, the commissioner shall provide detail as to the assessment that is being issued to each corporation included in the cumulative assessment in the form of work papers made available to the principal reporting corporation in connection with the notice of the cumulative assessment that is directed to such principal reporting corporation. Nothing in this paragraph shall preclude the commissioner from separately and directly assessing any individual corporation subject to tax under said chapter 63, rather than assessing such corporation through the means of a cumulative assessment as referenced in this paragraph, even when such corporation participated in or was required to participate in the filing of a combined report.
(3) If the commissioner audits or verifies the returns of the same tax for 2 or more tax periods and determines, as a result thereof, that the amounts assessed result in overpayments for some tax periods and underpayments for others, the commissioner shall offset the overpayments against the underpayments and refund any net overpayment as required by section 36. An application for abatement under section 37 shall not be required for overpayments resulting from assessments made pursuant to this section.
(4) Failure to receive the notice provided for by this section shall not affect the validity of the tax.
(c) In the case of an arithmetic or clerical error or other obvious error, including any exclusion of taxable unemployment compensation or Massachusetts state lottery winnings, apparent either upon the face of the return or from a comparison of the return with any records pertaining to the taxpayer's liability or payment thereof, which are maintained by the commissioner or furnished to the commissioner from any third party source, the commissioner may assess a deficiency attributable to such error without giving notice to the person being assessed. The commissioner may make such corrections to errors found upon a taxpayer's return and to the amount shown as the tax assessed thereon, including an increase in tax due or a reduction in a refund claimed, as will cause the return to conform with any records pertaining to the taxpayer's liability or payment thereof, which are maintained by the commissioner or furnished to the commissioner by any third-party. Concurrently with the making of such corrections, the commissioner shall notify the taxpayer in writing of the changes made to the return. If within 30 days after the date of such notice, or within any extended period permitted by the commissioner, the taxpayer fails to challenge the corrections, the return as corrected shall constitute the taxpayer's amended self-assessed return and the commissioner shall not be required to assess the corrected tax, nor to provide the taxpayer with a notice of intention to assess, nor otherwise to send any notice of the corrected tax liability to the taxpayer. Any taxpayer that disagrees with corrections made by the commissioner's corrections under this subsection shall challenge them in writing within 30 days after the date of the commissioner's notice, or within any extended period permitted by the commissioner. Once so challenged, the commissioner shall be required to assess any additional tax not shown on the original return in accordance with subsection (b) and shall comply with subsection (e) of section 32 if the commissioner's initial corrections to the return resulted in the reduction or elimination of a refund claimed on the return by the taxpayer.
(d) In the case of a false or fraudulent return filed with intent to evade a tax or of a failure to file a return, the commissioner may make an assessment at any time, without giving notice of his intention to assess, determining the tax due according to his best information and belief.
(e) If a nonresident fails to file a return of income derived by him from sources within the commonwealth, as required by section six, the tax imposed by section five A of chapter sixty-two shall be assessed on the basis of his gross income from such sources. The commissioner shall determine such income according to his best information and belief and may assess the tax, with penalties and interest, and without allowance for deductions or exemptions.
(f) If an executor, as defined in chapter sixty-five C, omits from the gross estate items includable in such gross estate as exceed in amount twenty-five per cent of the gross estate stated in the return filed pursuant to section seventeen, the estate tax may be assessed at any time within six years after the return was filed. In determining the items omitted from the gross estate, there shall not be taken into account any item which is omitted from the gross estate in the return if such item is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the commissioner of the nature and amount of such item.
(g) The provisions of this section shall not apply to assessments of taxes imposed by chapters sixty-five or sixty-five A.
(h) Except as otherwise provided in subsection (d), in the case of a return filed pursuant to section six or eleven, if the taxpayer omits from gross income an amount properly includible therein which is in excess of twenty-five per cent of the amount of gross income stated in the return, the tax may be assessed at any time within six years after the return was filed. For purposes of this subsection, in the case of a trade or business, the term ''gross income'' shall mean the total of the amounts received or accrued from the sale of goods or services, if such amounts are required to be shown on the return, prior to diminution by the cost of such sales or services. In determining the amount omitted from gross income, there shall not be taken into account any amount which is omitted from gross income stated in the return if such amount is disclosed on the return, or in a statement attached to the return, in a manner adequate to apprise the commissioner of the nature and amount of such item.
(i) Except as otherwise provided in subsection (d), in the case of a return filed pursuant to the provisions of sections twelve, fourteen or sixteen, if the return omits an amount of such tax properly includible thereon which exceeds twenty-five per cent of the amount of such tax reported thereon, the tax may be assessed at any time within six years after the return is filed. In determining the amount of tax omitted on a return, there shall not be taken into account any amount of tax which is omitted from the return if the transaction giving rise to such tax is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the commissioner of the existence and nature of such item.
(j)(1) The commissioner shall not make any assessment under this chapter if that assessment is based on a change in policy unless such change in policy first is announced to taxpayers pursuant to the promulgation of a validly adopted regulation or the issuance of a technical information release, directive, administrative procedure or other similar public statement of equivalent formality that explains the change in policy. Further, no assessment based on a change in policy shall be made with respect to taxable years or periods that began prior to the issuance of a public written statement as provided in this paragraph.
(2) For purposes of this section, an assessment is based on a change in policy if it is contrary to a rule of law or the interpretation of a rule of law set forth in a regulation, technical information release, directive, administrative procedure, letter ruling, tax form, including instructions, or any other written guidance issued by the commissioner; provided, however, that the facts and circumstances on which the letter ruling was based are not materially different. A change in policy shall not occur when the commissioner merely applies a previously announced or established rule of law to the facts and circumstances of a particular taxpayer or transaction.