March 21, 2014

Reminder: Annual Requirement for Maintaining Massachusetts Manufacturing Classification by April 1, 2014

By Paul Graney, Partner, Tax & Business Services

Reminder: Annual Requirement for Maintaining Massachusetts Manufacturing Classification by April 1, 2014 Tax & Business

In 2013, Massachusetts implemented a new procedure requiring annual certification by any entity that seeks to be included in the “Annual List of Corporations Subject to Tax in Massachusetts.”

This list includes all corporations classified as manufacturing companies by the Massachusetts Department of Revenue. There are 3 primary benefits of this classification:

  1. Ability to claim Investment tax credits
  2. Ability to claim sales and use tax exemption on manufacturing assets
  3. Exemption from local property tax on manufacturing machinery and equipment

The list is used by local assessors to determine which businesses qualify for various property tax exemptions afforded entities that are classified as corporations for federal and state tax purposes. Any corporation that does not complete the online application by April 1 may be omitted from the Corporations Book and may not receive personal property tax exemptions to which it would otherwise be entitled.

Any entity that is treated as a disregarded entity or a partnership or is otherwise not treated as a corporation for federal income tax purposes (other than a Qualified Subchapter S Corporation, which has a special status) is not entitled to appear on the List, and is consequently not entitled to tax exemptions afforded to corporations under G.L. c. 59, §5, cl. 16 (2 & 3). Any such entity that previously appeared on the List will be removed.

What entities are not required to complete the certification process?
Any entity that (1) does not own real or personal property in Massachusetts as of January 1, (2) is a non-profit corporation that may be eligible for local property tax exemptions, or (3) is a sole-proprietor, would not be required to file the Annual Certification of Entity Tax Status.

After logging into an account, click on the Annual Certification of Entity Tax Status link located on the bottom left of the Welcome page. You will be directed to the online application and can proceed in completing it.

Should you have any questions or require additional information, please contact your Marcum LLP SALT professional.

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