Top 3 DOR Notices this Tax Season

03/31/2017

In DOR Updates

We’ve heard from many of you about various letters your clients have received from the Department of Revenue. We understand many of these notices lack helpful information and compliance can be onerous. We are working with the Department to ensure letters are clear and taxpayer friendly, but also understand they too need information to protect you, your clients and the legitimacy of our voluntary tax system. If you have questions or concerns about any notice your clients receive from the DOR, please don’t hesitate to contact us for assistance. In the meantime, I’d like to provide a brief update on the most common notices we’ve seen.

Verification letters – As you know, fraud continues to be a major problem for all tax administering entities. In response, the DOR has initiated an enhanced taxpayer verification effort, which includes comprehensive fraud filters to examine returns. This effort has been responsible for many of the verification letters you’ve received. We are working with the DOR to better understand the process and improve the letters. In the short term, they have agreed to remove the requirement that the taxpayer send a copy of their Social Security card as part of the verification effort, which should provide some comfort to you and your clients.

Taxpayers are encouraged to respond to these notices and can do so through the MassTaxConnect system by selecting “Info Requested on Income Tax” under the “File a Dispute” tab.

Changes to partnership apportionment – Earlier this tax season, incorrect letters were sent out to taxpayers notifying them of changes to partnership apportionment. In some cases, this glitch resulted in incorrect refunds. Please note, the Department of Revenue is aware of this issue and has halted these notices until the system is fixed. If you continue to receive these notices, please let us know.

Underreporting of income – Many member have received letters indicating “Possible Underreporting of Gross Receipts” requiring a response to the Department. These letters are being generated as part of a new voluntary compliance initiative that utilizes data analytic and detection technologies to limit losses, both in income taxes and in trustee taxes, including sales, meals, and room occupancy taxes. Please click here for an overview of the initiative provide by the DOR. We will continue to work with the Department to ensure the ratios and ranges used to trigger these notices are appropriate. We’d appreciate your feedback as we work through this process.

As always, if you have any questions, concerns, or need assistance contacting the Department of Revenue, please don’t hesitate to contact Amy Pitter at apitter@mscpaonline.org or Zach Donah at zdonah@mscpaonline.org. Best wishes for a smooth and notice-free end to tax season!

 

 

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