What you need to know about the Massachusetts tax amnesty program

Good news for taxpayers with Massachusetts back taxes: There will likely be a Massachusetts tax amnesty program sometime before June 30, 2025. While tax amnesty is in effect, the Massachusetts Department of Revenue will waive most penalties for qualifying taxpayers who fulfill the terms of the program.

The new budget bill, signed into law on July 29, 2024, authorizes the Massachusetts Department of Revenue to establish the amnesty program. The tax commissioner has yet to determine the scope of the tax amnesty, including eligible tax types, periods covered, and the look-back period. Here's what we know now:

• The Massachusetts tax amnesty program will run for 60 days during fiscal year 2025

• The tax amnesty program will conclude no later than June 30, 2025

• Tax amnesty will apply to tax returns due on or before December 31, 2024

• The department may apply limited look-back periods for unfiled returns, not to exceed four years

• The department is not authorized to waive interest due on delinquent tax returns

• Taxpayers who participate in this tax amnesty program are not eligible to participate in future tax amnesty programs for 10 years (starting in calendar year 2024)

If you owe Massachusetts back taxes, you'll want to keep an eye out for this tax amnesty program. It provides Massachusetts tax penalty forgiveness for eligible businesses and individuals.

Massachusetts tax forgiveness program FAQ

We'll update this FAQ as more information about the Massachusetts Department of Revenue amnesty program becomes available.

What is tax amnesty?

A tax amnesty is essentially a quid pro quo - a limited time when a state reduces or waives penalties and/or interest and fees on specified delinquent taxes for qualifying taxpayers who voluntarily pay them under the terms of the amnesty. Participating taxpayers get a clear conscience and a break on penalties and/or interest. The states get a boost in tax collections.

States may or may not invite unlicensed businesses to come forward without fear of facing criminal penalties. Often, tax amnesty programs apply only to taxpayers already registered with the state.

Tax amnesty programs can cover all taxpayers or just certain taxpayers, all tax types or only certain tax types. State legislatures typically set the parameters. Tax departments usually administer tax amnesty programs.

When is the Massachusetts tax amnesty program?

The Department of Revenue has yet to announce specific dates. Per HB 4800, the tax amnesty program must run for 60 days and conclude no later than June 30, 2025.

Who can participate in the Massachusetts tax amnesty program?

The Massachusetts tax forgiveness program will be open to qualifying business and individual taxpayers who failed to file eligible required returns for any tax period on or before December 31, 2024. We're awaiting further details.

Taxpayers determined to have acted with fraudulent intent won't qualify for Massachusetts tax penalty forgiveness. The commissioner cannot waive penalties for any taxpayer who is or has been the subject of a tax-related criminal investigation or prosecution, or for any taxpayer who delivers or discloses (or has delivered or disclosed) any fraudulent application, document, return, or other statement.

What periods does the Massachusetts tax forgiveness program cover?

Tax amnesty will apply to eligible tax returns due on or before December 31, 2024. For taxpayers who comply with the terms of the tax amnesty program, the commissioner may apply limited look-back periods for unfiled returns, not to exceed four years.

What taxes are included in the Massachusetts Department of Revenue amnesty program?

It's common for tax amnesty programs to apply to sales and use tax, income taxes, franchise tax, and withholding tax. However, the department has yet to specify which tax types will qualify for the Massachusetts tax penalty reduction.

We do know that amnesty will only apply to penalties the commissioner has the sole authority to waive. Fuel taxes administered under the International Fuel Tax Agreement and local taxes are among those not eligible for tax amnesty.

What penalties does Massachusetts tax amnesty forgive?

The department will waive most penalties on back taxes owed by qualifying business and individual taxpayers.

To qualify for the waiver, the taxpayer must voluntarily file the proper returns and pay the full amount of tax shown on their returns (or upon the commissioner's assessments) during the amnesty period, plus all applicable assessments and fees. The waiver will not apply to any period for which a taxpayer doesn't file property returns.

Interest is not eligible for Massachusetts tax amnesty. Additionally, tax amnesty does not apply to penalties due to:

• The underpayment of tax required to be shown on the return (Section 35A)

• Inconsistent reporting of income or disclosure (Section 35D)

• The sale or offers for sale of an automated sales suppression device or phantom-ware (Section 35F)

How do I apply for Massachusetts tax amnesty?

The commissioner has yet to establish the tax amnesty application process.

Tax amnesty programs don't come along often. This may be a great option for taxpayers owing Massachusetts back taxes.

Want to know more about back taxes? Read Back taxes: How to know if you owe them, what can you do if you're obligated to pay them.