Tax News

CCH (cch.taxgroup.com) reports:

  The Massachusetts Department of Revenue announced a voluntary compliance and enforcement initiative pertaining to employers that either have failed to file Massachusetts personal income tax withholding or wage and information returns or have misclassified workers that should have been classified as employees on such returns for past taxable periods. To be considered for voluntary disclosure, initial contact must be made with the Department's Wages and Enforcement Voluntary Disclosure Unit by letter postmarked between February 17, and April 30, 2009. Payment in full of amounts due on wage and information returns for tax periods beginning on or after January 1, 2008, plus applicable interest must be made no later than April 30, 2009.

  The Department will apply a limited seven-year look-back period for wage amounts required to be reported to the Department on employer withholding or wage and information returns for tax periods beginning on or after January 1, 2008. If an employer does not come forward voluntarily and the Commissioner discovers from a source other than the employer's voluntary disclosure that a employer has misclassified its employees, the Department will apply a look-back period that is appropriate and will not be bound by the seven-year look-back period. A taxpayer that has already been contacted by the Audit Division or is the subject of any other enforcement action is ineligible to participate in this initiative.

  Employers that seek to apply the limited look-back rules can voluntarily disclose employee misclassification and/or non-filing of withholding or wage and information returns by contacting the Department's Wage Enforcement Voluntary Disclosure Unit. The initial contact should be a letter from the employer or the employer's representative naming the employer, giving a brief general description of the employer's activities and stating the proposed application of the Department's reporting rules. The employer must furnish the Department with a list of names and Social Security numbers of its employees.

  Penalties are imposed whenever a tax return is filed late and whenever a tax is paid late. The Commissioner has authority to waive these late filing or payment penalties under certain circumstances. The Commissioner will generally waive such penalties when an employer demonstrates that the failure to file or pay resulted from reasonable cause and not willful neglect.

Technical Information Release 09-2 , Massachusetts Department of Revenue, February 9, 2009, ¶401-219

  Other References:

  Explanations at ¶89-164