AN ACT RELATIVE TO TAX LAWS.
Whereas , The deferred operation of this act would tend to defeat its purpose, which is forthwith to make certain changes in the tax laws and other laws relating to the department of revenue, therefore it is hereby declared to bemergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Section 3A of chapter 14 of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by striking out the second sentence, and inserting in place thereof the following sentence:- No such agreement shall be entered into unless proposals for the same have been invited in accordance with regulations governing the procurement by state agencies of contracts of similar value.
SECTION 2. Section 6 of said chapter 14, as so appearing, is hereby amended by adding the following paragraph:-
7. Shall establish written standards and procedures regarding the confidentiality and security of information disclosed by the commissioner to other agencies or entities, whether the disclosure is by means of an interdepartmental service agreement, contract or otherwise, and may suspend or decline to initiate the disclosure of the information if, in the commissioner's judgment, the agency or entity has not fully complied with all standards and procedures or is unable to so comply.
SECTION 3. Paragraph (c) of section 1 of chapter 62 of the General Laws, as so appearing, is hereby amended by striking out, in line 6, the figure "1998" and inserting in place thereof the following figure:- 2005.
SECTION 4. Section 3 of chapter 62 of the General Laws, as so appearing, is hereby amended by inserting after the word "deduction", in line 116, the following words:- but, the deduction shall be limited in the manner provided in section 222(d)(3) of the Code as amended and in effect for the taxable year.
SECTION 5. Paragraph (a) of Part B of said section 3 of said chapter 62, as so appearing, is hereby amended by adding the following subparagraph:-
(14) The amount as is described in section 1341(a)(2) of the Code, to the extent, if any, that that amount (i) was previously included in Massachusetts taxable income and (ii) is not otherwise deductible under section 2(d)(1) of this chapter.
SECTION 6. Section 5A of said chapter 62, as so appearing, is hereby amended by adding the following subsection:-
(d) For purposes of this section, the ownership of an interest in real property located in the commonwealth shall include, without limitation, the ownership of an interest in a partnership, to the extent that the partnership holds an interest in real property located in the commonwealth.
SECTION 7. Section 5 of chapter 62B of the General Laws, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-
Every employer who fails to withhold or pay to the commissioner any sums required by this chapter to be withheld or paid shall be personally and individually liable therefore to the commonwealth. The term "employer", as used in this paragraph and in section 11, includes an officer or employee of a corporation, or a member or employee of a partnership or limited liability company, who as such officer, employee or member is under a duty to withhold and pay over taxes in accordance with this section and section 2. Any sum withheld in accordance with section 2 shall be considered to be held in trust for the commonwealth.
SECTION 8. Section 12 of chapter 62C of the General Laws, as so appearing, is hereby amended by striking out paragraph (a) and inserting in place thereof the following paragraph:-
(a) Every financial institution, as defined in section 1 of chapter 63, shall, on or before the fifteenth day of the third month following the close of each taxable year, make a return to the commissioner giving such information as the commissioner considers necessary for the determination of the tax imposed by section 2 of chapter 63.
If any financial institution shall have participated in filing a consolidated return of income to the federal government, it shall file with the commissioner a statement of net income showing its gross income and deductions in accordance with the law and regulations governing the usual federal returns of corporations not so participating.
SECTION 9. Said chapter 62C is hereby amended by inserting after section 21 the following section:-
Section 21B. The unauthorized willful inspection of information contained in or set forth in a return or document filed with the commissioner, or of information which can identify a particular taxpayer that is received by the commissioner for the purposes of tax administration from the Internal Revenue Service or other taxing authority or derived from any other source, by (1) an employee of the commonwealth or a city or town therein, including the commissioner or a deputy, assistant, clerk, or assessor; (2) an employee of another state; (3) a person under contract with the commonwealth or an officer, director, or employee thereof; or (4) a person obtaining unauthorized access to a return, document, or information while the return, document, or information, including a return, document, or information stored in computer systems or computer files, is in the custody of the commissioner or of any other person or entity described in clauses (1) to (3), inclusive, is prohibited.
A violation of this subsection shall be punished by a fine of not more than $1,000 per return, document, or taxpayer, as the court determines, with respect to which information was inspected, or by imprisonment for not more than 1 year, or both, and by disqualification from holding office in the commonwealth for a period, not exceeding 3 years, as the court determines.
The determination by the commissioner that an employee of the department of revenue, or the determination by another agency head that an employee of such other agency has, in contravention of this subsection, willfully inspected information where the inspection was unauthorized and not protected by the good faith provision of this subsection, shall be grounds for dismissal of the employee.
A violation, as determined by the commissioner, of this subsection by any officer, director or employee of any person under contract with the commonwealth shall be grounds for prohibiting the officer, director or employee from working on the contract. A violation, as determined by the commissioner, of this subsection by a person under contract with the commonwealth, or an officer, director, or employee thereof, shall also be cause for terminating a current contract between the commonwealth and for prohibiting the contractor from entering into a future contract with the commonwealth.
SECTION 10. Section 30 of said chapter 62C of the General Laws, as so appearing, is hereby amended by striking out the first 2 paragraphs and inserting in place thereof the following 3 paragraphs:-
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.
SECTION 11. Said chapter 62C of the General Laws is hereby further amended by inserting after section 30 the following section:-
Section 30A. (a) If the tax due any other state, territory or possession of the United States, or the Dominion of Canada or any of its provinces, on account of any item of Massachusetts gross income of a Massachusetts resident, is finally determined by that jurisdiction to be less than the tax previously reported, and such tax was the basis for a credit claimed by the Massachusetts resident under subsection (a) of section 6 of 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 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 has not been fully assessed, the commissioner shall, notwithstanding the 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 jurisdiction that it has made a final determination of the person's tax. A person 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.
(b) If, as a result of a change by such a jurisdiction in a person's tax due that jurisdiction, the person believes that he is entitled to additional credit under subsection (a) of section 6 of chapter 62 and that a lesser tax was due the commonwealth than was paid, the person 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. 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.
(c) Any person failing to comply with subsection (a) shall be assessed a penalty in the sum of $100, or 10 per cent of the additional tax found due, whichever sum is smaller, the penalty to become part of the additional tax found due. For reasonable cause shown, the commissioner may, in his discretion, abate the penalty in whole or in part.
(d) For purposes of this section, the term "person" shall include an individual or a fiduciary subject to taxation under chapter 62.
(e) For purposes of this section, a final determination of a change may be initiated by the filing of an amended return by the taxpayer in the jurisdiction whose tax gives rise to the change.
(f) The commissioner of revenue may promulgate rules and regulations necessary to implement this section.
SECTION 12. Said chapter 62C is hereby further amended by inserting after section 35 thereof the following 4 sections:-
Section 35A. (a) If this section applies to any portion of an underpayment of tax required to be shown on a return, there shall be added to the tax an amount equal to 20 per cent of the portion of the underpayment to which this section applies. For purposes of this section, the term "underpayment" means the amount by which any tax exceeds the amount shown as the tax by the taxpayer on the return.
(b) This section shall apply to the portion of any underpayment which is attributable to 1 or more of the following: (1) negligence or disregard of the tax laws of the commonwealth or of public written statements issued by the commissioner; (2) any substantial understatement of liability for a tax referred to in section 2.
(c) For purposes of this section, the term "negligence" includes any failure to make a reasonable attempt to comply with the laws or public written statements, the term "disregard" includes any careless, reckless, or intentional disregard, and there is a substantial understatement of liability for a tax for any tax period if the amount of the understatement for the period exceeds the greater of 10 per cent of the tax required to be shown on the return for the period or $1,000.
(d) For purposes of subsection (c), the term "understatement" means the excess of the amount of the tax required to be shown on the return for the period over the amount of the tax which is shown on the return. The amount of the understatement shall be reduced by that portion of the understatement which is attributable to (i) the tax treatment of any item by the taxpayer if there is or was substantial authority for the treatment; or (ii) any item if the relevant facts affecting the tax treatment of the item are adequately disclosed in the return or in a statement attached to the return, and there is a reasonable basis for the tax treatment of the item by the taxpayer, but this subparagraph (ii) shall not apply in the case of listed abusive transactions or strategies within the meaning of paragraph (b) of section 35B.
(e) The penalty set forth in this section shall apply only in cases where a return of tax is filed.
Section 35B. (a) A penalty shall not be imposed under section 35A with respect to any portion of an underpayment if it is shown that there was reasonable cause for such portion and that the taxpayer acted in good faith with respect to such portion. With respect to listed abusive transactions or strategies within the meaning of subsection (b), the commissioner may, by regulation, set forth circumstances under which the penalties otherwise may be waived in the interest of the efficient administration of the tax laws of the commonwealth.
(b) The commissioner may, from time to time, list by regulation items that he considers to be abusive transactions or tax strategies for purposes of section 35A and of this section.
Section 35C. (a) If (i) any part of any understatement of liability with respect to any return or claim for abatement or refund is due to a position for which there was not a realistic possibility of being sustained on its merits; (ii) any person who is a return preparer with respect to the return or claim knew or reasonably should have known of the position; and (iii) the position was not disclosed as provided in subsection (d) of section 35A or was frivolous; the person shall pay a penalty of $1,000 with respect to the return or claim unless it is shown that there is reasonable cause for the understatement and the person acted in good faith. The penalty imposed under this paragraph may be assessed within 3 years after the return or claim was filed. Any claim for abatement of the penalty shall be filed within 3 years from the time the penalty was paid. The commissioner may waive or abate the penalty imposed under this subsection if the taxpayer demonstrates that its failure to comply was due to reasonable cause and not willful neglect.
(b) If any part of any understatement of liability with respect to any return or claim for refund is due to (i) a willful attempt in any manner to understate the liability for tax by a person who is a return preparer with respect to the return or claim, or (ii) a careless, reckless or intentional disregard by the person of the tax laws of the commonwealth or of public written statements issued by the commissioner; the person shall pay a penalty equal to the greater of $1,000 or 10 per cent of the tax attributable to such part of the understatement; but, if both the penalty imposed under subsection (a) and the penalty imposed under this subsection are applicable to the same return or claim, the penalty imposed under this subsection shall be reduced by the amount of the penalty imposed under subsection (a). The penalty imposed under this subsection may be assessed against the preparer at any time. A claim for abatement of the penalty shall be filed within 2 years from the time the assessment was made.
(c) Except as otherwise provided in this section, the penalties imposed under this section shall be administered in accordance with the rules set forth in this chapter for the administration of taxes generally.
Section 35D. (a) A taxpayer subject to the tax imposed under chapter 62 or an excise imposed under chapter 63 that takes an inconsistent position in reporting its income subject to tax under said chapters shall disclose the inconsistency when it files its return.
(b) For purposes of this section, a taxpayer is considered to have taken an "inconsistent position" when (i) the governing law in another state in which the taxpayer files a return is the same in all material respects as the law in the commonwealth; and (ii) if the taxpayer had interpreted the law of the commonwealth as it interpreted the law of the other state in filing its return in such state, the taxable income attributed to the commonwealth would have been greater.
(c) Any taxpayer that fails to disclose an inconsistency as required under subsection (a) shall pay a penalty equal to the amount of tax attributable to the inconsistency, which penalty shall be in addition to all other penalties that may apply. The commissioner may waive or abate the penalty if the inconsistency or the failure to disclose was attributable to reasonable cause and not willful neglect.
SECTION 13. Section 31A of said chapter 62C, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-
If a person fails to pay to the commissioner any required tax of a corporation, partnership or limited liability company and the person is personally and individually liable therefore to the commonwealth under section 5 of chapter 62B, section 7B of chapter 64G, section 16 of chapter 64H or section 17 of chapter 64I, the commissioner shall notify the person in writing at any time during the period of time that the assessment against the corporation, partnership or limited liability company remains in existence and unpaid. The person or his representative may confer with the commissioner or his duly authorized representative as to the assessment of the tax or the proposed determination that he is personally and individually liable therefore within 30 days after the date of such notification. After the expiration of 30 days from the date of the notification, the person shall be personally and individually liable for the tax of the corporation, partnership or limited liability company, which shall be considered to be assessed against the person, and a lien under section 50 upon all property and rights of property, whether real or personal, belonging to the person shall arise in favor of the commonwealth.
SECTION 14. Said chapter 62C is hereby further amended by inserting after section 35D, inserted by section 12 of this act, the following section:-
Section 35E. (a) If a person (i) organizes or assists in the organization of a plan or arrangement or the sale of a plan or arrangement, and (ii) makes or furnishes, or causes another person to make or furnish, a statement with respect to the allowability of a deduction or credit, the excludability of income, or the securing of any other tax benefit, including but not limited to the avoidance of a filing requirement with respect to a tax return that would otherwise be required to be filed under this chapter, which the person knows or has reason to know is false, fraudulent or deliberately misleading as to any material matter, that person shall pay, with respect to each taxpayer to whom the statement is made, a penalty equal to $5,000, or, if the person establishes that it is lesser, 100 per cent of the gross income derived or to be derived from the activity described in this subsection. The penalty imposed under this subsection may be assessed against the person within 6 years after the statement was made. A claim for abatement of the penalty shall be filed within 2 years from the time the assessment was made.
(b) Except as otherwise provided in this section, the penalties imposed under this section shall be administered in accordance with the rules set forth in this chapter for the administration of taxes generally.
SECTION 15. Section 36A of said chapter 62C of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by adding the following paragraph:-
If the commissioner determines that he has made any payment in error, he shall notify the person to whom payment was made, in writing, making demand for repayment. If within 30 days thereafter the amount demanded is repaid in full, no interest shall be due. If repayment of the full amount demanded is not made within 30 days, the outstanding sum shall, without further action by the commissioner, be considered to be a tax assessed under this chapter as of the date of the demand, and subject to all the provisions thereof.
SECTION 16. Section 43 of said chapter 62C, as so appearing, is hereby amended by striking out, in line 3, the words "fifty dollars" and inserting in place thereof the following figure:- $100.
SECTION 17. Section 49A of said chapter 62C, as so appearing, is hereby amended by striking out subsections (a) and (b) and inserting in place thereof the following 2 subsections:-
(a) A person applying to any department, board, commission, division, authority, district or other agency of the commonwealth or a subdivision of the commonwealth, including a city, town or district, for a right or license to conduct a profession, trade or business or for the renewal of the right or license, shall certify upon application, under penalties of perjury, that he has complied with all laws of the commonwealth relating to taxes, reporting of employees and contractors, and withholding and remitting of child support.
(b) Upon receipt of the application, and once the commissioner has promulgated applicable regulations and implemented to his satisfaction the manner and method, including electronic data matching, by which verification may be obtained, the department or other entity charged with issuing the right or license shall confirm that the applicant is in good standing with respect to all returns due and taxes payable to the commissioner as of the date of issuance of the confirmation. An applicant shall be considered to have consented to the commissioner's release of tax and child support data to the department or other entity to the extent necessary to confirm the applicant's adherence to the tax and child support laws of the commonwealth. A right or license shall not be issued or renewed unless the issuer has confirmed the tax or child support status of the applicant as required herein; but, the commissioner may issue waivers of the requirements of this subsection for reasonable cause, and the existence of a non-frivolous appeal of a tax or child support assessment, or of a payment agreement with which the taxpayer is fully compliant shall not prevent issuance of the license.
No contract or other agreement for the purposes of providing goods, services or real estate space to any of the foregoing agencies shall be entered into, renewed or extended with any person unless the person certifies in writing, under penalties of perjury, that he has complied with all laws of the commonwealth relating to taxes, reporting of employees and contractors, and withholding and remitting of child support and, subject to the conditions stated above, the contracting agency confirms with the commissioner that the person is in good standing with respect to all returns due and taxes payable to the commissioner as of the date of confirmation.
SECTION 18. Subsection (a) of section 50 of said chapter 62C, as so appearing, is hereby amended by inserting after the first sentence the following sentence:- The lien shall also extend to property or rights to property of a trust with respect to tax amounts due from a grantor or other person treated as the owner of a portion of such trust by reason of sections 671-678 of the Code, and to property or rights to property of a disregarded entity with regard to tax amounts due from the owner of the entity, but with respect to real property and fixtures, the lien shall not be valid against a mortgagee, pledge, purchaser or judgment creditor unless the notice to be recorded pursuant to paragraph (1) of subsection (b) includes therein the names of the persons in whom the record title to the real property or fixtures stands at the time of recording the notice.
SECTION 19. Section 30 of chapter 63 of the General Laws, as so appearing, is hereby amended by striking out, in lines 17 to 19, inclusive, the words "nor to a corporation exempt from taxation under section 501 of the Code, as amended and in effect for the taxable year,".
SECTION 20. Said section 30 of said chapter 63, as so appearing, is hereby further amended by striking out, in lines 42 to 44, inclusive, the words "to a corporation, association or organization which is exempt from taxation under section 501 of the Code, as amended and in effect for the taxable year,".
SECTION 21. Said section 30 of said chapter 63, as so appearing, is hereby further amended by inserting after the word "allowed.", in line 89, the following sentence:- In the case of a corporation exempt from taxation under section 501 of the Code, "net income" means unrelated business taxable income, as defined in section 512 of the Code.
SECTION 22. Said section 30 of said chapter 63, as so appearing, is hereby further amended by inserting after paragraph 8 the following paragraph:-
9. Notwithstanding paragraph 8, the net worth of a domestic business corporation taxable under clause (1) of subsection (a) of section 32 or of a foreign corporation taxable under clause (1) of subsection (a) of section 39 that is a qualified real estate investment trust shall be such portion of the book value of its total assets less its liabilities on the last day of the taxable year as the book value of its tangible assets situated within the commonwealth on said date and not subject to local taxation plus the amount of its intangible assets on said date allocable to this commonwealth, as hereinafter determined, bear to the book value of its total assets on said date. The intangible assets allocable to this commonwealth shall be such portion of the book value of its total intangible assets on the last day of the taxable year, less the book value on said date of its investment in and advances to subsidiary corporations which represent 80 per cent or more of the voting stock of said corporations, as shall be found by multiplying said amount by such corporation's income apportionment percentage, as determined under section 38. In determining the book value of any asset, the commissioner may disallow any reserve, in whole or in part, with respect thereto which, in his judgment, is not reasonable and proper. For the purpose of this paragraph, "qualified real estate investment trust" shall mean a domestic or foreign corporation that both qualifies as a real estate investment trust under section 856 of the Code, as defined in paragraph 16 of this section, and that is required to file with the Securities and Exchange Commission annual and other reports as specified in Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended; and "advances" shall mean such interests in a corporation where a corporation-shareholder relationship exists, determined under such regulations as the commissioner may issue and under section 385 of the Federal Internal Revenue Code as amended and in effect for the taxable year and the regulations issued thereunder.
SECTION 23. Said section 31A of said chapter 63, as so appearing, is hereby further amended, by striking out, in line 129 and in line 155, the parenthetical "(1)".
SECTION 24. Said section 31A of said chapter 63, as so appearing, is hereby further amended by striking out, in lines 130 to 132, inclusive, the words ", or (2) is considered recovery property under section one hundred and sixty-eight of said Code".
SECTION 25. Said section 31A of said chapter 63, as so appearing, is hereby further amended by striking out, in lines 156 to 158, inclusive, the words ", or (2) is considered recovery property under section one hundred and sixty-eight of said Code".
SECTION 26. Section 38 of said chapter 63, as so appearing, is hereby amended by striking out subsection (f) and inserting in place thereof the following subsection:-
(f) The sales factor is a fraction, the numerator of which is the total sales of the corporation in this commonwealth during the taxable year, and the denominator of which is the total sales of the corporation everywhere during the taxable year. As used in this subsection, unless specifically stated otherwise, "sales" means all gross receipts of the corporation, including deemed receipts from transactions treated as sales or exchanges under the Code, except interest, dividends, and gross receipts from the maturity, redemption, sale, exchange or other disposition of securities, provided, however, that "sales" shall not include gross receipts from transactions or activities to the extent that a non-domiciliary state would be prohibited from taxing the income from such transactions or activities under the Constitution of the United States. Sales of tangible personal property are in this commonwealth if:-
1. the property is delivered or shipped to a purchaser within this commonwealth regardless of the f. o. b. point or other conditions of the sale; or
2. the corporation is not taxable in the state of the purchaser and the property was not sold by an agent or agencies chiefly situated at, connected with or sent out from premises for the transaction of business owned or rented by the corporation outside this commonwealth. "Purchaser", as used in clauses 1 and 2 of this paragraph, shall include the United States government.
Sales, other than sales of tangible personal property, are in this commonwealth if:-
1. the income-producing activity is performed in this commonwealth; or
2. the income-producing activity is performed both in and outside this commonwealth and a greater proportion of this income-producing activity is performed in this commonwealth than in any other state, based on costs of performance.
For the purposes of this subsection: (1) in the case of the licensing of intangible property, the income-producing activity shall be considered to be performed in the commonwealth to the extent that the intangible property is used in the commonwealth; (2) the corporation shall be considered to be taxable in the state of the purchaser if the tangible personal property is delivered or shipped to a purchaser in a foreign country; (3) sales of tangible personal property to the United States government or any agency or instrumentality thereof for purposes of resale to a foreign government or any agency or instrumentality thereof are not sales made in the commonwealth; (4) in the case of the sale, exchange or other disposition of a capital asset, as defined in paragraph (m) of section 1 of chapter 62, used in a taxpayer's trade or business, including a deemed sale or exchange of such asset, "sales" are measured by the gain from the transaction; and (5) "security" means any interest or instrument commonly treated as a security as well as other instruments which are customarily sold in the open market or on a recognized exchange, including, but not limited to, transferable shares of a beneficial interest in any corporation or other entity, bonds, debentures, notes, and other evidences of indebtedness, accounts receivable and notes receivable, cash and cash equivalents including foreign currencies, and repurchase and futures contracts.
Notwithstanding the foregoing, mutual fund sales by a mutual fund service corporation as defined in subsection (m), other than the sale of tangible personal property, shall be assigned to this commonwealth to the extent that shareholders of the regulated investment company are domiciled in this commonwealth as follows:
(a) by multiplying the mutual fund service corporation's total dollar amount of sales of such services on behalf of each regulated investment company by a fraction, the numerator of which shall be the average of the number of shares owned by the regulated investment company's shareholders domiciled in this commonwealth at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the mutual fund service corporation's taxable year, and the denominator of which shall be the average of the number of shares owned by the regulated investment company shareholders everywhere at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the mutual fund service corporation's taxable year.
(b) A separate computation shall be made to determine the sale for each regulated investment company, the sum of which shall equal the total sales assigned to the commonwealth.
The commissioner shall promulgate regulations to implement this paragraph.
SECTION 27. Section 38C of said chapter 63 is hereby amended by adding the following paragraph:-
For purposes of this section and section 38, the development and sale of standardized computer software shall be considered a manufacturing activity, without regard to the manner of delivery of the software to the customer.
SECTION 28. Said chapter 63 is hereby amended by inserting after section 38S, the following section:-
Section 38T. (a) Every foreign or domestic corporation which is exempt from taxation under section 501 of the Code shall be subject to tax under section 32 or 39 on its unrelated business taxable income, as defined in section 512 of the Code. The property or net worth of the corporation shall not be subject to tax under this chapter and the minimum excise under section 32 or 39 shall not apply. If a corporation has unrelated business taxable income that is taxable both within and without the commonwealth, it may apportion its net income to the commonwealth pursuant to section 38, provided that its apportionment factors shall be determined by reference only to the unrelated business activity of the corporation. The credits allowed under this chapter shall be determined only with respect to the unrelated business activity of the corporation.
(b) An entity that is exempt from taxation under section 501 of the Code shall not be considered to be a foreign or domestic corporation for purposes of chapter 59.
SECTION 29. Section 42B of said chapter 63, as appearing in the 2004 Official Edition, is hereby amended by adding the following paragraph:-
For purposes of this section and section 38, the development and sale of standardized computer software shall be considered a manufacturing activity, without regard to the manner of delivery of the software to the customer.
SECTION 30. Chapter 64G of the General Laws is hereby amended by striking out section 7B, as so appearing, and inserting in place thereof the following section:-
Section 7B. Every operator who fails to pay to the commissioner any sums required to be paid by this chapter shall be personally and individually liable therefor to the commonwealth. The term "operator", as used in this section, includes an officer or employee of a corporation, or a member or employee of a partnership or a limited liability company, who as such officer, employee or member is under a duty to pay over the taxes imposed by this chapter.
SECTION 31. Section 1 of chapter 64H of the General Laws, as so appearing, is hereby amended by striking out, in line 210, the word "and".
SECTION 32. Said section 1 of said chapter 64H, as so appearing, is hereby further amended by inserting after the word "amended", in line 212, the following words:- ; and (vii) a "service charge" or "tip" that is distributed by a vendor to service employees, wait staff employees or service bartenders as provided in section 152A of chapter 149.
SECTION 33. Said section 1 of said chapter 64H, as so appearing, is hereby further amended by striking out, in line 230, the word "also".
SECTION 34. Said section 1 of said chapter 64H, as so appearing, is hereby further amended by inserting after the word "steam.", in line 230, the following 2 sentences:- A transfer of standardized computer software, including but not limited to electronic, telephonic, or similar transfer, shall also be considered a transfer of tangible personal property. The commissioner may, by regulation, provide rules for apportioning tax in those instances in which software is transferred for use in more than one state.
SECTION 35. Paragraph (q) of section 6 of said chapter 64H, as so appearing, is hereby amended by striking out clause (1) and inserting in place thereof the following clause:-
(1) Sales of both returnable and nonreturnable containers when sold without the contents to persons who place the contents in the container and sell the contents together with the container.
SECTION 36. Paragraph (qq) of said section 6 of said chapter 64H, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Sales of gas, steam, electricity or heating fuel for use by any business that has 5 or fewer employees that had gross income of less than $1,000,000 for the preceding calendar year, and that reasonably expects gross income of less than $1,000,000 for the current calendar year.
SECTION 37. Said chapter 64H is hereby further amended by striking out section 16, as so appearing, and inserting in place thereof the following section:-
Section 16. Every person who fails to pay to the commissioner any sums required by this chapter shall be personally and individually liable therefor to the commonwealth. The term "person", as used in this section, includes an officer or employee of a corporation, or a member or employee of a partnership or limited liability company, who as such officer, employee or member is under a duty to pay over the taxes imposed by this chapter.
SECTION 38. Chapter 64I of the General Laws, is hereby amended by striking out section 17, as so appearing, and inserting in place thereof the following section:-
Section 17. A person who fails to pay to the commissioner any sums required by this chapter shall be personally and individually liable therefor to the commonwealth. The term "person", as used in this section, includes an officer or employee of a corporation, or a member or employee of a partnership or limited liability company, who as such officer, employee or member is under a duty to pay over the taxes imposed by this chapter. A person shall not be personally or individually liable for uncollected use tax due from a corporation, partnership, or limited liability company on its purchases of tangible personal property purchased for use of the corporation, partnership or limited liability company unless the person's failure to pay the tax was willful or unless the person made personal use of the property subject to tax.
SECTION 39. Chapter 93 of the General Laws is hereby amended by striking out section 52A, as so appearing, and inserting in place thereof the following section:-
Section 52A. The IV-D agency, as set forth in chapter 119A, shall report periodically to consumer reporting agencies the name of any non-custodial parent who is delinquent in the payment of child support, and the amount of overdue support owed by the parent, subject to the requirements of the following paragraph. The IV-D agency shall report information only to an entity that has furnished satisfactory evidence that the entity is a consumer reporting agency.
Before reporting the name of any person who is delinquent in the payment of child support to a consumer reporting agency, the IV-D agency shall afford the person notice and due process pursuant to sections 6 and 17 of chapter 119A. Nothing in this section shall impair the rights of any obligor under federal or state law regarding consumer credit reports or consumer credit reporting agencies.
SECTION 40. Section 23 of chapter 119 of the General Laws, as so appearing, is hereby amended by striking out the last 2 sentences and inserting in place thereof the following 3 sentences:- The department shall obtain and provide to the IV-D agency, as set forth in chapter 119A, an assignment of support rights on behalf of each child receiving foster care maintenance payments pursuant to Title IV, Part E, of the Social Security Act. The department shall be subrogated to the rights of each such child and shall obtain and provide to the IV-D agency information that may be reasonably necessary to enforce the department's right, including, but not limited to the following information: the child's name, date of birth, place of birth, Social Security number, address and benefit level and, if known, each parent's name, date of birth, place of birth, Social Security number, most recent address and most recent employer. The department shall notify said IV-D agency forthwith when a child whose rights to support are subrogated no longer receives foster care maintenance payments pursuant to Title IV, Part E, of the Social Security Act.
SECTION 41. The second paragraph of subsection (a) of section 2 of chapter 119A of the General Laws, as so appearing, is hereby amended by inserting after the first sentence the following sentence:- In enforcing such subrogation rights, the IV-D agency may proceed to establish a support order pursuant to section 32F of chapter 209, or to establish paternity or a support order pursuant to chapter 209C, notwithstanding the failure of the obligee whose rights to support have been subrogated to the commonwealth to attend a hearing in an action pursuant to said chapters, upon a showing that written notice of the hearing was provided to the obligee by first class mail to the most recent residential address that the obligee has provided to the department of transitional assistance, the department of social services or the division of medical assistance.
SECTION 42. Section 3B of said chapter 119A, as so appearing, is hereby amended by inserting after the words "subsection (a)", in line 69, the following words:- , the notice pursuant to subsection (b) shall specify the threshold for modification and shall identify the sources of the financial information relating to the parties, including tax information pursuant to chapter 62C and wage reporting information pursuant to chapter 62E that serves as the basis for the calculation of the amount of support in the proposed stipulation.
SECTION 43. Said section 3B of said chapter 119A, as so appearing, is hereby further amended by striking out subsection (f).
SECTION 44. Section 6 of said chapter 119A, as so appearing, is hereby amended by inserting after the word "situations", in lines 16 and 17, the following words:- ; seeking a warrant pursuant to section 34A of chapter 215 in appropriate situations.
SECTION 45. Said section 6 of said chapter 119A, as so appearing, is hereby further amended by striking out, in lines 119 and 121, the word "six" and inserting in place thereof, in each instance, the following figure:- 10.
SECTION 46. Section 10 of chapter 200A of the General Laws, as so appearing, is hereby amended by adding the following subsection:-
(i) On or about January 1 of each year and quarterly thereafter, the treasurer shall review information made available by the IV-D agency, as set forth in chapter 119A, and by the department of revenue to ascertain if any person, as defined in section 1, with an interest in property surrendered to the state treasurer under this chapter owes past due child support and is subject to a present child support lien pursuant to section 6 of said chapter 119A, and to ascertain if any person with an interest in property surrendered to the state treasurer owes any past due tax liability to the commonwealth and is subject to a present tax lien pursuant to section 50 of chapter 62C. If a person with an interest in property surrendered to the state treasurer under this chapter owes past due child support or any past due tax liability, the treasurer shall notify the IV-D agency or the department of revenue, respectively, of the person's name, address, social security number, and taxpayer identification number, if available.
(1) If the person with an interest in property surrendered to the state treasurer under the provisions of this chapter is the sole registered owner of the property surrendered to the state treasurer, the treasurer shall first disburse to the IV-D agency the full amount of the funds held in the abandoned property trust fund owing to the person or such portion of the property held that satisfies the person's past due child support obligation. If funds remain available after a disbursement to the IV-D agency, or if no such obligation to the IV-D agency is owed, the treasurer shall disburse to the department of revenue the full amount of the funds held in the abandoned property trust fund owing to the person or such portion of the property held that satisfies the person's past due tax liability.
(A) If any such property surrendered to the state treasurer is subject to possible liquidation in accordance with section 9, the property shall be held subject to an administrative lien preventing payment to the reported owner. Payment shall be made in accordance with paragraph (1) subsequent to any liquidation by the treasurer.
(B) The treasurer shall disburse to any person only that portion of the property surrendered not used to offset any child support obligation or outstanding tax liability.
(2) If the person with an interest in property surrendered to the state treasurer under this chapter is not the sole registered owner of the property surrendered to the state treasurer, the IV-D agency, or the department of revenue must notify all registered owners at the address provided by the treasurer of their right to request an administrative review pursuant to sections 6 and 17 of chapter 119A or sections 53 to 64, inclusive, of chapter 62C before any disbursement by the treasurer pursuant to paragraph (1) of this section. The treasurer shall notify the IV-D agency or the department of revenue, respectively, of the names and addresses of all registered owners, if available.
(3) Pursuant to paragraph (8) of subsection (b) of section 6 of chapter 119A and subsection (d) of section 54 of chapter 62C, if the treasurer makes a payment to the IV-D agency or the department of revenue under this section the treasurer shall be discharged from any obligation or liability arising from the payment.
(4) A person aggrieved by the transfer of property to the IV-D agency or the department of revenue may pursue administrative remedies pursuant to sections 6 and 17 of chapter 119A or sections 53 to 64, inclusive, of chapter 62C, respectively.
(5) Information provided by the IV-D agency or the department of revenue to the treasurer under this section may only be used for the purpose of assisting the IV-D agency in collecting past-due child support or the department of revenue in collecting past due tax liability. A person who uses the information for any other purpose shall be liable in a civil action to the IV-D agency or the department of revenue in the amount of $1,000 for each violation.
SECTION 47. Subsection (a) of section 32F of chapter 209 of the General Laws, as so appearing, is hereby amended by adding the following 2 sentences:- In an action pursuant to this section where the rights to support of a party have been subrogated to the commonwealth pursuant to chapters 18, 119, or 118E, or Title IV, Parts A or E, or Title XIX of the Social Security Act, or any other public assistance program as required by federal or state law, the court shall proceed to establish an order for support pursuant to this section, notwithstanding the failure of the party to attend a hearing, upon a showing that written notice of the hearing was provided to the party by first class mail to the most recent residential address that the party has provided to the department of transitional assistance, the department of social services or the division of medical assistance. For good cause shown, the court may set aside an entry of default and, if an order or judgment has been entered, may likewise set aside the order or judgment in accordance with rule 60(b) of the rules of domestic relations procedure.
SECTION 48. Section 4 of chapter 209C of the General Laws, as so appearing, is hereby amended by striking out the first and second sentences and inserting in place thereof the following sentence:- Actions under this chapter to establish paternity, support, custody or visitation of a child shall be filed in the judicial district or county in which the child and 1 of the parents lives and if neither of the parents lives in the same judicial district or county as the child then the complaint shall be filed in the judicial district or county where the child lives; but, if the parents have been parties to a prior action under this chapter and that action has not been dismissed, a subsequent action under this chapter may be filed in the judicial district or county where the earlier action was filed.
SECTION 49. Section 16 of said chapter 209C, as so appearing, is hereby amended by adding the following 2 subsections:-
(h) In an action pursuant to this chapter where the rights to support of a party have been subrogated to the commonwealth pursuant to chapters 18, 119, or 118E, or Title IV, Parts A or E, or Title XIX of the Social Security Act, or any other public assistance program as required by federal or state law, the court shall proceed to establish orders pursuant to this chapter, notwithstanding the failure of the party to attend a hearing, upon a showing that written notice of the hearing was provided to the party by first class mail to the most recent residential address that the party has provided to the department of transitional assistance, the department of social services or the division of medical assistance. For good cause shown, the court may set aside an entry of default and, if an order or judgment has been entered, may likewise set aside such order or judgment in accordance with rule 60(b) of the rules of domestic relations procedure.
(i) In an action pursuant to this chapter in a case receiving IV-D services, the court shall, upon good cause shown and upon verification of identity satisfactory to the court, permit a party to testify in an action pursuant to this chapter by telephone; and upon a showing that a party is incarcerated, permit the party to submit testimony by affidavit.
SECTION 50. Section 23 of said chapter 209C, as so appearing, is hereby amended by inserting after the word "void", in line 4, the following words:- , except as to any support arrearage which is owed to the commonwealth as reimbursement for public assistance and which accrued before the date that the parents intermarry.
SECTION 51. Section 34A of chapter 215 of the General Laws, as so appearing, is hereby amended by inserting before the word "Actions", in line 1, the following:- (a).
SECTION 52. Said section 34A of said chapter 215, as so appearing, is hereby further amended by adding the following subsection:-
(b) Upon the request of the IV-D agency as set forth in chapter 119A, when a total arrearage amounting to the support owing for a 6-month period has accrued under the defendant's most recent order or judgment for support and the IV-D agency has been unable to bring the defendant before the court on a capias, the court shall issue a warrant for the arrest of the defendant. The IV-D agency shall file an affidavit accompanying the request for a warrant that states: (1) a total arrearage amounting to the support owing for a 6-month period has accrued under the defendant's most recent order or judgment for support; (2) the amount of the total arrearage; (3) the date of the last payment, if any; and (4) a description of the efforts made to serve the capias on the defendant. The IV-D agency shall also provide the court with identifying information on the defendant's name, last known address, date of birth, gender, race, height, weight, hair and eye color, any known aliases and any such information as shall be required for a warrant to be accepted by the criminal justice information system maintained by the criminal history systems board. A warrant that contains the above identifying information as provided by the IV-D agency to the court shall not be nullified if the information is later found to be inaccurate. If any of the above identifying information is not known to the IV-D agency, the IV-D agency may apply to the court for an exemption from the requirement to provide the information. The court shall grant the exemption if the court decides that the unknown information is not essential to identifying the defendant. The defendant may not challenge the validity of a warrant based on the granting of the exemption. The court shall enter the warrant, including the identifying information provided by the IV-D agency to the court and the name of the court that issued the warrant, into the warrant management system as set forth in section 23A of chapter 276. The warrant shall consist of the information that appears in the warrant management system, and a printout of the warrant from the criminal justice information system shall constitute a true copy of the warrant. The entry of the warrant into the warrant management system and the criminal justice information system shall constitute notice and delivery of the warrant to all law enforcement agencies who have arresting authority pursuant to section 23 of chapter 276.
Upon arrest, the arresting authority shall arrange for transportation of the defendant to the court that issued the warrant. If the defendant is arrested when the court is not in session, the defendant shall be held by the arresting authority or county jail facility, and transported to the issuing court during the next session and presented to the court. If the defendant voluntarily submits his person to the court, he shall likewise be brought before the court. The court shall notify the IV-D agency and conduct a hearing to recall the warrant and shall issue an order for the defendant to do one or more of the actions set forth in clauses (1) to (6), inclusive, of section 34.
Whenever a warrant is recalled or removed, the court shall, without unnecessary delay, enter the recall or removal in the warrant management system which entry shall be electronically transmitted to the criminal justice information system. The court shall also provide to the defendant a notice of recall of warrant.
A law enforcement officer who in the performance of his duties relies in good faith on the warrant appearing in the warrant management system shall not be liable in any criminal prosecution or civil action alleging false arrest, false imprisonment, or malicious prosecution or arrest by false pretense.
The issuing court shall provide notice no later than 30 days after the issuance of the warrant to the defendant. The notice shall contain information on the name and address of the issuing court, the date of the last payment of child support, if any, the amount of the total child support arrearage, a description of the method by which the defendant may clear the warrant and a summary of the consequences the defendant may face for not responding to the warrant. The notice shall be deemed satisfactory if mailed to the address stated on the warrant.
If a warrant remains outstanding for 1 year following the date that the warrant is entered into the warrant management system it shall constitute evidence of willful nonsupport in a criminal action pursuant to chapter 273.
SECTION 53. Chapter 258 of the General Laws is hereby amended by adding the following section:-
Section 14. For the purpose of satisfying liens for past due child support, securing repayment of public assistance benefits, and past taxes, a public employer shall comply with sections 24D, 24E, and 24F of chapter 175 and any regulations promulgated thereunder in the same manner as if it were a company authorized to issue policies of insurance pursuant to said chapter 175.
SECTION 54. Section 15A of chapter 273 of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by inserting after the word "them", in line 5, the following word:- or.
SECTION 55. Section 23 of chapter 276 of the General Laws, as so appearing, is hereby amended by inserting, after the word "crime", in line 2, the following words:- and child support warrants issued pursuant to section 34A of chapter 215.
NO SECTION 56.
SECTION 57. Section 413 of chapter 149 of the acts of 2004 is hereby repealed.
SECTION 57A. The introductory clause of section 414 of said chapter 149 is hereby amended by striking out the date "January 1, 2002" and inserting in place thereof the following date:- January 1, 2003.
SECTION 57B. Notwithstanding any general or special law to the contrary, to the extent that, as a result of the enactment of sections 57 and 57A, any taxpayer has overpaid tax due under chapter 62 of the General Laws with respect to long term capital gains recognized in taxable years beginning on or after January 1, 2002 and before January 1, 2003, the following provisions shall apply:
(a) Such taxpayers may apply for abatement of the overpayment of tax on long-term capital gains for said taxable years pursuant to section 37 of chapter 62C of the General Laws, on or before June 30, 2006, within 3 years from the due date for such return, determined without regard to extensions, within 2 years from the date of assessment or deemed assessment of such tax on long-term capital gains, or within 1 year of the date of payment of such tax on long-term capital gains, whichever is later.
(b) The taxpayer must apply for such abatement upon the forms or in the manner determined by the commissioner of revenue and shall provide such documentation of the overpayment as the commissioner may require.
(c) The commissioner shall abate any such overpayment in 4 annual installments, substantially equal in amount, without interest.
(d) The commissioner shall offset any proposed abatement under this section by the amount of any additional tax due from the taxpayer under chapter 62 of the General Laws for the taxable year, whether or not the additional tax relates to capital gains, and whether or not such additional tax may otherwise be timely assessed under said chapter 62C.
(e) An amount due to be refunded to a taxpayer under this section shall not be treated as a tax payment or credit until such time as it becomes payable under paragraph (c).
(f) This section shall be the exclusive basis for any claim for refund of an overpayment of tax under chapter 62 of the General Laws with respect to long term capital gains recognized in taxable years beginning on or after January 1, 2002, and before January 1, 2003, and resulting from enactment of sections 57 and 57A of this act. No interest shall accrue or be payable with respect to such refunds, pursuant to section 40 of chapter 62C of the General Laws or otherwise.
(g) To the extent not inconsistent with the provisions of this act, the provisions of chapter 62C of the General Laws, including without limitation provisions allowing offsets of refunds for unpaid tax assessments, child support obligations, or other applicable obligations, shall apply to refunds under this section.
(h) Notwithstanding paragraph (c), for reasons of administrative convenience, the commissioner may in his discretion refund payments to a taxpayer that total $1000 or less in a single lump sum, without interest.
SECTION 58. Notwithstanding any general or special law to the contrary, the comptroller shall transfer $20,000,000 from the Commonwealth Stabilization Fund to the General Fund within 10 days of the effective date of this act.
SECTION 59. Sections 19 to 21, inclusive, and sections 27 to 29 inclusive, shall apply to taxable years beginning on or after January 1, 2006.
SECTION 60. Sections 3 and 26 shall apply to taxable years beginning on or after January 1, 2005.
SECTION 61. Sections 17, sections 31 to 34, inclusive, and section 36 shall be effective the first day of the fourth month following the date of passage.
SECTION 62. Sections 10 and 11 shall apply to final determinations made on or after the effective date of this act.
SECTION 63. Section 12 shall apply to returns filed on or after the effective date of this act.
SECTION 64. Section 14 shall apply to statements made on or after the effective date of this act.
SECTION 65. Sections 46 and 53 shall be effective 6 months after the effective date of this act.
SECTION 66. Section 22 shall be effective for tax years ending on or after August 9, 2004.