Don't miss the Corporations Book deadline!
Massachusetts law requires each corporation and any entity classified as a corporation for federal and state tax purposes, and subject to local taxes such as real estate, personal property and motor vehicle excess taxes, to file an Annual Certification of Entity Tax Status (ACETS).
The purpose of the ACETS — now in its second year — is to allow the Department of Revenue (DOR) to meet its mandate to provide an up-to-date list of entities to local assessors. The list is referred to as the Corporations Book, which used to be printed but is now available only online. As part of the DOR mandate, each corporation that has been accepted and qualified as a manufacturer by the DOR, must be clearly identified as a manufacturer in the Corporations Book. The book allows local assessors to determine which taxpayers are entitled to certain exemptions under the law. The classification date is Jan. 1 of each year and the status report must be filed by April 1 of the same year.
If your company is not in the book, it may lose exemptions or pay additional costs in resolving classification issues. (Non-profit corporations or entities, such as charitable, religious, veterans or other such organizations, are exempt.) The appeal period is 30 days after the book is published online by the DOR. So if you submit information for the book, check it and file a timely appeal if it's not there. Local assessors have the right to challenge entries in the book if they believe they're not correct.
To file an ACETS, a business must be registered on Webfile for Business. Then, the designated person opens the ACETS box and — in a quick and easy-to-follow process — clicks on a series of questions (most of them “yes/no”), such as:
— Do you or do you expect to own any real or personal property in Mass. as of Jan. 1?
— Are you a sole proprietor (you report your business income on your personal Form 1, Massachusetts Resident Income Tax Return, Form 1-NR/PY, or Massachusetts Nonresident/Part-Year Resident Income Tax Return)?
— Are you a non-profit corporation or entity that receives a local property tax exemption as a charitable, religious, veteran or other organization?
— What is your legal form of organization? (Not tax status.)
— Is your business treated as a corporation for federal and Massachusetts tax purposes as of Jan. 1, 2014? (Disregarded entities must answer "No" and Qualified Subchapter S Subsidiaries, or Qsubs, must answer "Yes".)
— Is this a change from its status in the prior year?
— Select the method used to determine that the entity is treated as a corporation for federal and state purposes. (Gives three possible choices.)
— Is the entity a QSub?
— How is the entity treated for Massachusetts tax purposes? (Gives five possible choices.)
To avoid the frustration that would come with not being listed in the Corporations Book, determine if you're required to file an ACETS, get it done in time and be sure you check that you're in the book when it's published. For more information, visit the DOR website at www.mass.gov/DOR.
William E. Philbrick is senior vice president at the accounting firm of Greenberg, Rosenblatt, Kull & Bitsoli, in Worcester.
WBJ Web Partners
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