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Tax Liability-MDOR Collections, Liens, and Levies

The Massachusetts Commissioner of Revenue (commissioner) has broad statutory powers to collect delinquent taxes. It is the duty and obligation of the commissioner to collect all assessed taxes. The tax collection process normally begins by sending a notice of liability to the taxpayer followed by a demand for payment. Refusal or failure to make payment following the commissioner’s demand allows the commissioner to exercise his broad statutory power for the collection of taxes.

MDOR Tax Liens

Massachusetts General Laws Chapter 62C, §50 provides the Commonwealth with a general statutory lien against all property or rights to property, real or personal, belonging to a delinquent taxpayer. Such a lien arises on the date the taxes are assessed or deemed to be assessed but the lien is not effective until the taxpayer has refused or neglects to pay after a demand. A demand is a simple bill from the MDOR which states the amount due and demands payment of the liability. The lien consists of tax, interest, penalty, and any other statutory additions.

A tax lien has a definitive length of existence. A tax lien remains in existence until the tax debt is satisfied or until ten years have elapsed from the date of assessment. The lien can be extended an additional ten years if a new notice is refiled. Additionally, the ten year statute of limitations can be extended by agreement between the MDOR and taxpayer. Further, a properly filed lien attaches not only to property rights in existence at the time of the lien filing, but also to after-acquired property. The Massachusetts Supreme Judicial Court has upheld a lien’s attachment to after-acquired property. Luchini v. Commissioner, 436 Mass. 403 (2002).

A lien can be released by the filing of a certificate of release of tax lien issued by the commissioner. A certificate is issued when: payment of the tax liability has been made; there has been satisfaction of a judgment against the taxpayer concerning the liability; the taxpayer furnishes a bond to the commissioner and the bond is accepted; and, if the commissioner determines that the liability or judgment is unenforceable as a matter of law.

MDOR Tax Levies

A levy is a summary method of collection and includes the power to seize property. M.G.L.c. 62C, §53. The commissioner has a wide range of authority in its levy power. MDOR tax levies can be placed on all property or rights to property belonging to the taxpayer, including unemployment compensation, wages, bank accounts, judgments, settlements, lottery winnings, and any other state/federal benefit that is not exempt by statute. M.G.L.c. 62C, §53(a). The commissioner can also levy tangible property. After seizure of such tangible property, the commissioner can hold a public sale/auction of the items.

Any individual in possession of the property or rights to property of the taxpayer can have a duty to surrender such property or rights when served with a valid levy notice. Failure or refusal to surrender the property to the commissioner renders that individual individually liable to the Commonwealth. Any individually who surrenders a taxpayer’s property to the Commonwealth after a levy notice is discharged from any obligation to the taxpayer concerning such property.

MDOR License Revocation or Suspension

The MDOR has the authority to request that a state agency suspend or revoke the licenses or certificates of any holder who is a tax delinquent or has failed to file any required tax returns. M.G.L. c. 62C, §47A(d).  The commissioner must provide a taxpayer with notice 30 days prior to any suspension or revocation of license. Such notice allows a taxpayer to pay the claimed liability, file any requested tax returns, or prove tax compliance. Additionally, if the taxpayer has, in good faith, filed an application for abatement, or has appealed a denial of abatement to the Appellate Tax Board, the commissioner cannot revoke or suspend a license while these matters are pending.

If a license or certificate has been suspended or revoked, it cannot be reinstated without a certificate of compliance from the commissioner. A certificate of compliance verifies that all tax obligations of the taxpayer are satisfied.

Lake Shore Legal, LLC

If you have federal or state tax liabilities contact an attorney at Lake Shore Legal today. Our attorneys can assess your financial situation, your tax liabilities, and your options before both the IRS and state tax agencies. Our attorneys can assist you in avoiding the above collection action, whether through the filing of an offer in compromise, arranging a payment agreement, or seeking currently non-collectible status. Contact Lake Shore Legal today. (508) 943-7800; info@lakeshorelegalsolutions.com

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