Massachusetts – Collection of Taxes Pending an Appeal

SALT Report 2542 – The Massachusetts Department of Revenue issued a Directive that discusses the circumstances under which the Department is authorized to proceed with the collection of sales and use taxes, hotel occupancy taxes, and meals taxes, while a taxpayer is appealing an assessment or judgment.

Pursuant to Massachusetts law a taxpayer is not required to pay tax, and the Commissioner cannot involuntarily collect tax, if the taxpayer:

  • Has filed an application for abatement contending no tax is due with the Commissioner,
  • Has filed a petition with the ATB or a Probate Court, or
  • Is appealing a decision on a petition described above and the taxpayer has prevailed in an ATB or Probate Court proceeding

However, if a taxpayer voluntarily files a trustee tax return but does not pay the tax due to the Department, it will be presumed that the taxpayer has collected and is in possession of the tax due. In this situation the Department will proceed with collection proceedings against the taxpayer or whoever is deemed the responsible person, regardless of whether an appeal has been filed.

The taxpayer or responsible person may rebut the above presumption if they check Box 5 on Form CA-6, Application for Abatement. The taxpayer will also be given the opportunity to provide additional information to the collections bureau that may rebut the presumption that the taxpayer has collected the tax.

In addition to the collection provisions above, there are certain circumstances in which the Commissioner may require the taxpayer to post a security while an appeal or abatement is pending:

  • When collection of tax will be jeopardized by any delay,
  • When the past tax return filing or payment history of the taxpayer raises doubt as to the probability of collecting the tax, or
  • When an application for abatement or petition is deemed frivolous and has been filed to avoid payment of the tax

If the taxpayer is required to post security, and fails to do so within 30 days of the demand, the Department will proceed with collection proceedings unless the taxpayer files an appeal with the ATB.

For Further Information

Massachusetts Department of Revenue – Directive 13-1