Tax Minute

MASSACHUSETTS ANNUAL REPORT

All Massachusetts corporations are required to file an annual report with the Secretary of State's office on a yearly basis. This report comes with a $109 annual filing fee. Many taxpayers may have noticed that if you do not file this report, you do not receive any notification from the Secretary of the Commonwealth and there does not appear to be adverse consequences. However, what these taxpayers do not know is that the Secretary of the Commonwealth will administratively dissolve any Massachusetts corporation that does not file their annual report for a few years. In a recent Tax Court case, this cost a taxpayer dearly. In this case, a taxpayer was audited and was found to have an $80,000 deficiency on their Federal income tax return. The taxpayer petitioned the Tax Court within the allotted 90-days after the assessment. The IRS responded to the petition through the Tax Court to say that the taxpayer had no legal standing as their corporate charter was revoked. The Tax Court agreed and the taxpayer was forced to pay the deficiency. Once your corporation is dissolved by the Secretary of State it no longer exists for legal purposes. If you have failed to file your Massachusetts annual report for several years, you should log onto the Secretary of State's website to see if your corporate charter has been revoked and file Articles of Revival to prevent this problem.

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