Bank of America as Trustee v. Commissioner of Revenue: Massachusetts Supreme Judicial Court Will Hear Case in 2016

The Massachusetts Supreme Judicial Court (SJC) will hear the appeal of Bank of America against the Massachusetts Commissioner of Revenue in 2016. The SJC accepted Bank of America’s application for Direct Appellate Review on November 12, 2015. The current docket number is SJC-11995.

Review of the Appellate Tax Board Decision

The Appellate Tax Board (ATB) ruled on June 10, 2015 that Bank of America, acting in its role as trustee of certain trusts, must pay Massachusetts state fiduciary income taxes for the trust income. For each trust, the grantor was a Massachusetts resident, and the beneficiaries all live outside of Massachusetts. The ATB found that Bank of America as trustee was considered a Massachusetts resident, so the trust is subject to Massachusetts taxation under the applicable statute.

Bank of America challenged this statutory interpretation on multiple grounds. For example, they contended that a corporation such as Bank of America is not a statutory resident of Massachusetts, even though it operates many branches and offices in Massachusetts, because its primary corporate headquarters are in North Carolina. In addition, they argued that if Bank of America is considered a resident of every U.S. state where it operates, it could lead to a situation where multiple states can collect income tax on the same trust income. The ATB rejected these arguments. The decision is available for download as the third document at this link.

Prior Commentary by Our Law Firm

Attorney Morris N. Robinson, the Managing Director of M. Robinson & Company, Tax Law Specialists, has posted a previous Massachusetts Tax Alert™ on this case. Morris raises constitutional arguments that would prevent the Massachusetts government from taxing the fiduciary trust income of these out-of-state beneficiaries. Attorney Robinson’s blog post from October 22, 2015 is available at this link.

Amicus Announcment

The SJC has invited the public to submit amicus briefs. Any member of the public may submit an amicus brief to provide additional information or argument that may assist the court in reaching its ultimate decision. The SJC regularly publishes Amicus Announcments for cases on its docket prior to oral arguments. Amicus briefs must conform to the Massachusetts Rules of Appellate Procedure, including Rules 16, 17, 18, 19, and 20.

The Amicus Announcement for the Bank of America case reads as follows:

    ANNOUNCEMENT: The Justices are soliciting amicus briefs. Whether, and if so in what circumstances, the Massachusetts fiduciary income tax, see G. L. c. 62, § 10, applies to corporate trustees that are neither incorporated in Massachusetts nor have their principal places of business here; whether, and if so how, the definition of resident or inhabitant in G. L. c. 62, § 1(f)(2) (any natural person who is not domiciled in the commonwealth but who maintains a permanent place of abode in the commonwealth and spends in the aggregate more than one hundred eighty-three days of the taxable year in the commonwealth), applies to corporate trustees.

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