Section 30: Federal income tax changes; assessment; abatement; penalty
Section 30. If the federal government finally determines that there is a difference from the amount previously reported in (1) the taxable income of a person subject to taxation under chapter 62, or (2) a federal credit to which such person may be entitled, but only if the calculation of such credit has an effect on the computation of the tax imposed under chapter 62, the final determination shall be reported, accompanied by payment of any additional tax due with interest as provided in section 32, to the commissioner within 1 year of receipt of notice of such final determination. If the federal government finally determines that there is a difference from the amount previously reported in (1) the taxable income of a person subject to taxation under chapter 63, or (2) a federal credit to which the person may be entitled, but only if the calculation of the credit has an effect on the computation of the tax imposed under chapter 63, the final determination shall be reported, accompanied by payment of any additional tax due with interest as provided in section 32, to the commissioner within 3 months of receipt of notice of the final determination. If the federal taxable estate of an estate subject to taxation under chapter 65C is finally determined by the federal government to be different from the taxable estate as previously reported, the final determination shall be reported, accompanied by payment of any additional tax due with interest as provided in section 32, to the commissioner within 2 months of receipt of notice of the final determination. The report shall include a statement of the reasons for the difference in a form as the commissioner may require. If from the report or upon investigation it shall appear that any tax under chapter 62, chapter 63 or chapter 65C has not been fully assessed, the commissioner shall, notwithstanding the 3 year limitation in section 26, assess an additional tax, if any, with respect thereto, with interest as provided in section 32. An assessment under this section shall be made in the manner provided in section 26 within 1 year of the receipt of the report or, where no report is filed with the commissioner, within 2 years of the receipt by the commissioner of information from the federal government that it has made a final determination of the person's federal taxable income or credits or of the federal taxable estate. A person or estate may include in the report of a change under this paragraph proposed offsets to the additional tax due based on issues unrelated to the change. The offsets, if allowed, may reduce or eliminate the additional tax due, but in no case shall the offset give rise to a refund of tax that would otherwise be barred as untimely.
If, as a result of the change by the federal government in a person's federal taxable income, federal credits or federal taxable estate, the person or estate believes that a lesser tax was due the commonwealth than was assessed, the person or estate may apply in writing to the commissioner for an abatement thereof under section 37 within 1 year of the date of notice of the final determination by the federal government. The commissioner in his consideration of the application may offset against the proposed abatement additional tax due whether or not the additional tax is based on issues related to the change. Offsets based on issues unrelated to the change may reduce or eliminate the abatement, but in no case shall the offset give rise to a net amount of tax due based on an assessment that would otherwise be barred as untimely.
The commissioner shall make no assessment under this section, nor allow any abatement under this section unless the assessment or abatement, less any offset allowable against the assessment or abatement under this section, is directly attributable to changes, adjustments, or corrections to the taxpayer's federal taxable income or credits or federal estate resulting in a final determination.
Any person or estate failing to comply with the first paragraph shall be assessed a penalty of 10 per cent of the additional tax found due and such penalty shall become part of the additional tax found due. For reasonable cause shown, the commissioner may, in the commissioner's discretion, abate the penalty in whole or in part.
For purposes of this section, the term ''person'' shall include any individual, partnership, trust, corporate trust or any other fiduciary subject to taxation under chapters sixty-two or sixty-five C, or any corporation subject to taxation under chapter sixty-three.
For purposes of this section, a final determination of a change by the federal government may be initiated by the filing of an amended federal return by the taxpayer.
For purposes of this section, a final determination of a change by the federal government includes a closing agreement or accepted offer in compromise under the Code, as amended and in effect for the taxable year, or any similar agreement that results in a change in federal taxable income, whether or not the audit or other review is complete with respect to issues not addressed in the agreement.
In the case of the filing of a combined report pursuant to section 32B of said chapter 63, the principal reporting corporation shall file all notices of change as provided under this section, together with payment of additional amounts due or an application for abatement, as the case may be, on behalf of all corporations participating in or required to participate in the filing of the combined report. Without limitation, such notices of change shall be required from the principal reporting corporation in the event of a final determination of federal change to the income included or required to be included in the combined report, or any portion thereof, without regard to the particular corporations taking such income into account for federal income tax purposes or to whether such corporations are required to file a return under this chapter. A principal reporting corporation shall be subject to the penalties provided under this section in the event of failure to file a required notice of change under this paragraph.
The commissioner of revenue may promulgate rules and regulations necessary to implement this section.