Recent decisions by the Massachusetts Appellate Tax Board (ATB) illustrate that a taxpayer must fulfill three prerequisites in order to obtain ATB jurisdiction in tax appeals against the Commissioner of Revenue:
- File all required tax returns.
- File a Form CA-6: Application for Abatement, with the Department of Revenue. The CA-6 filing can be either after, or simultaneous with, the tax return filing.
- The taxpayer must timely file a petition with the ATB within sixty (60) days after the Department of Revenue has denied the taxpayer’s Application for Abatement.
If the taxpayer fails to meet all three prerequisites listed above, the ATB can – and probably will – dismiss the appeal for lack of jurisdiction.
In a previous blog post “Preserving Massachusetts Appellate Tax Board Appeals Rights: Recent ATB Decision Highlights Three Traps for the Unwary,” dated May 7, 2015, we explored the third prerequisite of timely filing an appeal after the Department of Revenue had denied the application for abatement. In this article we will discuss the Flynn appeal and illustrate how the ATB interprets and applies the first prerequisite to file all required tax returns.
The Flynn Appeal
The Massachusetts Appellate Tax Board (“ATB”) issued a six-page ruling on July 20, 2015 in Flynn v. Commissioner of Revenue (ATB 2015-395), available at this link. The ATB dismissed Mr. Flynn’s appeal for lack of jurisdiction. Mr. Flynn has appealed to the Massachusetts Appeals Court. His briefs are due in April 2016. See docket numbers 2015-P-1509 and 2015-P-1464.
In Flynn, the taxpayer did not file a Massachusetts individual income tax return for 2008 even though he resided in Massachusetts and earned taxable wages from Massachusetts employers. The Department of Revenue issued a Notice of Failure to File, but the taxpayer still did not file a tax return. The Department of Revenue then issued a Notice of Assessment for about $2,000.
The taxpayer responded and filed an affidavit containing frivolous arguments that he was not required to file a tax return or to pay any tax because he was not a “taxpayer.” The Department of Revenue issued a Notice of Abatement Determination, denying the taxpayer’s arguments. The taxpayer filed a timely Petition Under Formal Procedure with the Appellate Tax Board.
II. ATB Decision
The ATB dismissed the appeal for lack of jurisdiction because the taxpayer did not file an individual income tax return. The ATB cited both a statute and case law to support its ruling.
Massachusetts General Laws, c. 62C, § 38 states that “[n]o tax assessed on any person liable to taxation shall be abated unless the person assessed shall have filed, at or before the time of bringing his application for abatement, a return as required by this chapter for the period for which his application relates[.]”
B. Case Law
The ATB cited the case of Commissioner of Revenue v. Pat’s Super Market, Inc., 387 Mass. 309, 310 (1982). In Pat’s Super Market, the Massachusetts Supreme Judicial Court overturned the ATB’s ruling in favor of the taxpayer because the ATB had no jurisdiction to hear the appeal.
The factual record in Pat’s Super Market showed that the taxpayer sold both “party packs” and sandwiches, but did not file any meals tax returns. The Court found that, even if the taxpayer was not liable for meals tax on the party packs, the taxpayer was nonetheless a “person liable to taxation” – as quoted in the statute above – for meals tax on the sandwiches. Therefore, the taxpayer’s failure to file any meals tax returns deprived the ATB of jurisdiction to hear the taxpayer’s argument that the party packs were not subject to meals tax.
Additional guidance on the tax abatement and appeal process is available at AP 627: Applications for Abatement, published by the Massachusetts Department of Revenue.
The material in this publication does not constitute legal advice. It is intended for general information purposes only. If legal issues arise, the reader should consult legal counsel.
If you have questions or need assistance with regard to international tax planning, the attorneys at M. Robinson & Company may be able to assist you. Please feel free to contact us at 617-428-6900.
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