What Are Interest and Penalties?
Interest. If you fail to pay the tax when due, interest will be charged. For an explanation of how interest is compounded in Massachusetts, see TIR 92-6, available at mass.gov/dor.
Penalty for late payment. The penalty for late payment is 1% per month (or fraction thereof) of the tax due, up to a maximum of 25%.
Penalty for failure to file. The penalty for failure to file a tax return by the due date is 1% per month (or fraction thereof) of the tax due, up to a maximum of 25%. If you were required to file a tax return for income received in any prior year and you did not file, you must file for that prior year.
Penalty for protested (“bad”) payment. If your payment is not honored by your bank because of insufficient funds or any other reason, a penalty may be added of $30 or the amount of the payment, whichever is less.
Addition for underpayment of estimated tax. You will generally be subject to this addition to tax if you did not have withholding and/or estimated payments equal to 80% of the total tax liability required to be paid and your 2019 tax due after credits and withholding is greater than $400. The 80% requirement is reduced to 66.67% for individuals who receive two-thirds of their income from fishing or farming. If you failed to meet these requirements, you must complete and enclose Massachusetts Form M-2210 to calculate the amount you must add to line 50. You do not have to complete Form M-2210 if the balance due with your return is $400 or less.
You may not be subject to an underpayment penalty if you qualify for one of the following exceptions:
-You are a qualified farmer or fisherman and are paying the full amount of the tax due on or before March 1, 2020;
-You were a Massachusetts resident and were not liable for 2018 taxes (where the taxable year was 12 months); or
-The sum of your estimated payments and withholding equals or exceeds your 2018 tax (where the taxable year was 12 months and a return was filed).
If you qualify for one of these exceptions, fill in the Exception oval under line 50 on Form 1 and enclose Form M-2210 indicating which of the exceptions applies to your circumstances. A limited number of taxpayers may also qualify for a waiver of the underpayment penalty for one or more installments if:
-The underpayment was because of casualty or disaster; or
-During 2018 or 2019 you retired after reaching age 62 or became disabled and the underpayment was due to reasonable cause and not willful neglect.
If you think you qualify for one of these waivers, go to mass.gov/dor and use DOR’s online application for abatement return or enclose Form M-2210 and an explanatory statement with your return and fill in the Exception oval under line 50. If your waiver is not for all four installments, complete Form M-2210 to calculate the underpayment penalty for the installments which are not covered by the waiver. Form M-2210 is available by visiting mass.gov/dor.
Penalty for failure to report federal change. If the IRS changes your federal taxable income for a prior year (generally through audit), file an amended return within one year of the final federal determination to avoid this penalty. This penalty is equal to 10% of the additional tax due. If the change indicates a refund, you must file an amended return within one year of federal determination, including acceptance of an amended federal return by the IRS.