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Scott M. Susko counsels clients on all aspects of state and local tax matters. He represents individuals and businesses throughout the country at every stage of state and local tax controversies, including audit defense, administrative appeals and litigation. Scott also assists clients through changes in their business that can affect their tax posture, such as entry into new geographic or product markets, merger and acquisition activity, or state legislative developments. Read Scott M. Susko's full bio.

The Massachusetts Department of Revenue (Department) is widely promoting a new amnesty program with significant taxpayer benefits.  Our experience with Massachusetts amnesty suggests that this is the broadest program offered by the Department since 2002.

Individual and business taxpayers may participate in the program for taxes due on or before December 31, 2015. To participate in the program, taxpayers must complete an amnesty return online and submit payment for the full amount of tax and interest electronically by Tuesday, May 31, 2016.

The amnesty program, which waives most types of penalties, offers three special features for taxpayers to consider.

Taxpayers in Audit Can Participate

First, unlike many other state amnesty programs, the current Massachusetts program is available to taxpayers who are under audit. The Department’s auditors have been notifying taxpayers of the program, and Department personnel have confirmed with us that taxpayers under audit are eligible for the program. Department personnel have asked that taxpayers who wish to participate in the program simply notify their auditor.

Refunds Permitted

Second, unlike many other amnesty programs, taxpayers who participate in the Massachusetts program do not lose appeal rights or otherwise forfeit their right of refund for amounts that are disputed in the audit or that they later conclude were mistakenly paid under amnesty. A recent Technical Information Release provides that participation in the amnesty program and the payment of any tax and interest “does not constitute a forfeiture of statutory rights of appeal or an admission that the tax paid is the correct amount of liability due.”

Non-Filers Can Participate

Third, for the first time since 2002, non-filers may participate in the amnesty program.  Participating taxpayers will receive a three-year limited look-back period.

Taxpayers with eligible liabilities should seriously consider whether to participate in the program.

This month the New Jersey Economic Development Authority (the Authority) provided businesses with guidance, in the form of Frequently Asked Questions, on how to elect to have their unpaid Business Employment Incentive Program (the Program or BEIP) grants converted into tax credits pursuant to N.J. Rev. Stat. § 34:1B-129.

Under the Program, New Jersey awarded qualifying businesses cash grants for hiring new employees in the state for a term of up to 10 years.  Since the Program’s inception in 1996, the Authority has executed 499 BEIP agreements valued at nearly $1.6 billion.  However, since 2013, the New Jersey legislature has not funded the Program, and thus many businesses have not received grant payments owed by the state.

In January, Governor Christie signed P.L. 2015, c. 194 into law, permitting the voluntary conversion of outstanding BEIP grants into tax credits. The option to convert a BEIP grant to a tax credit is New Jersey’s attempt to provide relief to those businesses that have been awarded grants but have not received grant payments. The law, unfortunately, was short on details.

Businesses that wish to take advantage of the grant conversion must elect to convert the grant into a tax credit by July 11, 2016. Once the election is made, it is irrevocable.

Because a business cannot predict with any certainty whether the New Jersey legislature will fund the Program in future years, a business has to decide whether to opt to convert its grant. If a business does not elect to convert its grant, it risks losing all of its unpaid BEIP grants. On the other hand, if a business makes the election and the Program is funded in future years, the business will have no choice but to receive tax credits even though a cash payment might be more valuable to the business.

If a business elects to convert its grant commitments to tax credits, the credits will be issued over a period of years as set forth in the statute.   This delayed payment means that the business will suffer an additional loss of money owed by New Jersey on account of the time value of money. The statute provides that the BEIP tax credit must be used in the designated years and may not be carried forward. The credit is a priority credit and should be applied before all other credits. Accordingly, it is important to consider whether the other credits claimed by a business are refundable when deciding whether to make the election and calculating the potential benefit of conversion.

In anticipation of the July 11, 2016, deadline for businesses to opt to convert their grant into a tax credit, the Authority has provided guidance on how to make the election. This guidance, as mentioned above, is informal and not a regulation. The guidance provides that to make the election, a business must submit an executed Amendment to Agreement. The form Amendments to Agreement for different tax types are available on the Authority’s website.  Once a business opts to convert its grant into a tax credit, New Jersey will issue an annual certificate for the tax credit, which the business will attach to its return for that year to substantiate the BEIP tax credit. If a business has no tax liability in a particular year (before taking other tax credits into account), New Jersey will issue a cash refund in the amount of the certificate.

Pursuant to the Authority’s guidance, a business that is not filing corporate business tax in New Jersey must elect by the same deadline of July 11, 2016, whether to receive a tax credit transfer certificate. Such a business may apply for a tax credit transfer certificate and sell the credit for at least 75 percent of face value before considering present value adjustments. The purchaser of the credit may not sell to a third party.

Northeastern University, the Trustees of Boston University, Wellesley College and 131 Willow Avenue, LLC prevailed in their appeal of the Massachusetts Department of Revenue’s (the Department) rejection of their Brownfields tax credit applications in Massachusetts Superior Court. 131 Willow Avenue, LLC v. Comm’r of Revenue, 2015 WL 6447310 (2015). The taxpayers argued, and the court agreed, that the Department improperly denied their applications based on the unlawful use of Directive 13-4 issued by the commissioner of revenue (the Commissioner). At issue was the validity of Directive 13-4’s prohibition on nonprofit and transfer Brownfields tax credit applicants from receiving or transferring credits based on documentation submitted in a taxable year that commenced before the effective date of a 2006 amendment expanding the Brownfields tax credit statute to include nonprofit organizations and allow for credit transfers. The court held that the directive was “unreasonable and [the Department’s] denial of the applications based on that directive was unlawful.” Continue Reading Massachusetts Court Holds Department of Revenue’s Guidance to Be Unreasonable

The Massachusetts Department of Revenue (the Department) released a draft administrative procedure introducing a pilot Voluntary Disclosure Program (the Program) for the settlement of uncertain tax issues for business taxpayers on January 19. The Department introduced this Program in response to a suggestion made by Scott Susko, an author of this article, and another practitioner, both of whom serve as taxpayer professional representatives on the Department’s Advisory Council. We commend the Department for reacting to this suggestion in such a proactive manner.

The Program will provide “a process through which uncertain tax issues may be resolved on an expedited basis, generally within four months” (All quotations in this post are from the Department’s draft administrative procedure).

We think this Program will be particularly helpful to public companies in resolving issues related to their financial statement reserves.

The Program defines an “uncertain tax issue” as an issue “for which there is no clear statutory guidance or controlling case law, and which has not been addressed by the Department in a regulation, letter ruling, or other public written statement,” and “for which a taxpayer would be required to maintain a reserve in accordance with ASC 740: Accounting for Uncertainty in Income Taxes (formerly Fin 48).” The issue also “must not have been addressed as part of a prior audit of the taxpayer, a prior application for abatement or amended return filed by the taxpayer, or a prior ruling request made by the taxpayer.”

To qualify for the Program, “any potential tax liability attributable to the uncertain tax issue(s) must be $100,000 or more, exclusive of interest and penalties.” A taxpayer that is under audit or has received notice of an impending audit is not eligible for the Program. The Department has the “discretion to determine that the Program is not appropriate for specific cases.”

The Department “will consider settlement of an uncertain tax issue(s) where: (1) the taxpayer has presented its position on the issue(s) and the Department agrees that the tax treatment of the issue(s) is uncertain; and (2) the taxpayer has fully disclosed and documented the issue(s) and the facts associated with that issue(s).”

A taxpayer may initiate the process by submitting an anonymous letter to the Department, which will respond to the taxpayer within 30 days. If the Department accepts the taxpayer into the Program, the taxpayer may submit an application, including a settlement proposal and identifying the taxpayer, within 45 days of receiving the Department’s acceptance letter.

The Department will waive penalties related to the uncertain tax issue for a taxpayer that reaches an agreement with the Department pursuant to the Program, as well as for a taxpayer that does not reach an agreement with the Department “provided the taxpayer acted in good faith.”

The Department requested practitioner comments on the draft administrative procedure by February 1, and MWE submitted two technical comments.

Our first comment was that following the initial evaluation, the Department should issue to the taxpayer a one-page technical position explaining whether it does or does not agree with the taxpayer’s position and responding to the taxpayer’s settlement proposal. The Department’s position would not be final, but it would be a helpful starting point to the taxpayer in terms of determining whether it would like to participate in the program before identifying itself to the Department.

Our second comment was that following the initial evaluation, the Department should provide a range or framework for a potential deal with the taxpayer. The potential deal would not be binding, but it would give the taxpayer some comfort in moving forward with the program.

In June of 2015, Connecticut passed legislation that implements combined reporting for tax years beginning on, or after January 1, 2016. Part of the new regime, which is codified by Conn. Gen. Stat. P.A. 15-5, § 144 (2015), requires water’s-edge combined groups to include entities incorporated in tax havens in the combined group. Just before the holidays, the Connecticut General Assembly passed legislation that narrowed the definition of a “tax haven” from the originally adopted definition. Under the originally passed combined reporting law, the determination of whether a jurisdiction was a “tax haven” was made using five different definitions. If any one definition was satisfied, the jurisdiction was a “tax haven.” None of the five definitions is entirely clear and each generally required an analysis of facts related to the jurisdiction’s government rather than the activities of a taxpayer in the jurisdiction. The original definition of tax haven was similar, but not identical to the Multistate Tax Commission Proposed Model Statute for Combined Reporting. The new law required the commissioner of revenue to publish a list of jurisdictions determined to be tax havens by September 30, 2016. In December, the Connecticut General Assembly convened a special session and passed Public Act 15-1, which amends the newly enacted tax haven law in section 37. As amended, the Connecticut statute still contains the five different definitions. However, the amended law excludes from the definition of a tax haven “a jurisdiction that has entered into a comprehensive income tax treaty with the United States” and which meets certain other requirements. Additionally, the December legislation also repealed the requirement for the commissioner to publish a list of tax havens. In sum, the limiting amendment to the tax haven law should provide taxpayers with some clarity, although that will be somewhat offset by the lack of a formal list. Connecticut is one of four New England states that considered and/or passed legislation adding tax haven provisions to their combined reporting regimes. Tax haven legislation passed in Rhode Island in 2015, as part of Rhode Island’s adoption of combined reporting effective for tax years beginning on or after January 1, 2015. The Maine and Massachusetts legislatures considered tax haven provisions, but ultimately did not pass such laws in 2015.

Earlier this month, the Governmental Accounting Standards Board (GASB) approved Statement No. 77, Tax Abatement Disclosures, which requires state and local governments to report on foregone revenue from tax abatement agreements. This will significantly increase scrutiny of negotiated tax incentives, particularly at the local level. Businesses need to consider how this may change their local incentive strategies.

To summarize, Statement 77 requires state and local governments to disclose basic information about their current incentive agreements, or other agreements, that reduce tax revenue:

  • Dollar amounts by which the government’s tax revenues were reduced as a result of tax abatement agreements;
  • The name and purpose of each tax abatement program;
  • The specific taxes being abated;
  • The authority under which the tax abatement agreements are entered into;
  • The criteria that make the recipient eligible to receive a tax abatement;
  • The mechanism by which the taxes are abated;
  • The provisions for recapturing abated taxes (e., clawbacks);
  • The types of commitments made by tax abatement recipients; and
  • Any other commitments made by the government as part of the agreements.

For tax abatements where a government has reduced its own revenue, disclosed information should be organized by each major tax incentive program. For incentives where one government’s revenue has been reduced by a different government’s abatement (e.g. a municipal property tax incentive reducing a school district’s revenue), disclosed information is based on the government that entered into the abatement agreement and the type of tax being abated.

Statement 77 permits the reporting government to decide whether to report the required information individually or in the aggregate. If agreements are disclosed individually, the government must establish a quantitative threshold to determine which agreements to disclose—it cannot disclose selectively. A reporting government is permitted to omit specific information if it is legally prohibited from disclosures, such as via state confidentiality laws or a confidentiality provision in the agreement itself.

The disclosure provisions of Statement 77 apply only to tax abatement agreements, which are negotiated agreements where a government agrees to forego tax in exchange for some benefit. Tax incentives that do not require an agreement are not affected. Negotiated grants or other non-tax incentives are also not affected.

Practice Note

Statement 77 will significantly change the world of incentives, particularly at the local level where negotiated agreements reducing property or sales taxes are common. The disclosures of the amounts of forgone revenue associated with tax abatement programs will provide ammunition to groups criticizing incentives, and gone are the days that The New York Times has to spend 10 months gathering state and local incentive data, as they did in 2012. Businesses should expect increased scrutiny during the approval process as governments become more sensitive to whether they are getting a “good deal.” Companies with existing agreements should also be concerned: local governments may seek to renege on their commitments as the costs become more apparent, particularly when new politicians come into office who were not part of the original deal.

One consideration in negotiating incentives will be to insist on strong confidentiality protections in an agreement. Statement 77 envisions governments limiting reporting if legally prevented from doing so. Securing confidentiality provisions in an incentive agreement, even going so far as to specify the level of detail of financial reporting, will help a business avoid surprise public disclosures, particularly in situations where the amount of incentive benefits may reflect confidential business information.

Now is the time to begin brownfield redevelopment projects in the State of New York. Reauthorization of and reforms to New York’s Brownfields Cleanup Program, which provides tax credits to redevelop contaminated properties, came into effect on July 1, 2015. The program has been reauthorized until 2026, giving businesses and developers a chance to remediate brownfields while generating millions of dollars in refundable credits.

State brownfield tax credit programs encourage remediation of contaminated property that might otherwise remain abandoned. New York, with its industrial heritage, has more than its share of such locations. The Brownfields Cleanup Program was started in 2003 as a way to encourage redevelopment of these properties. Once a participating project is granted a certificate of completion, it generates credits calculated as percentages of the site preparation costs and groundwater remediation costs, and of the costs of tangible property (buildings and capital equipment). The site preparation and groundwater remediation costs are the environmental expenses, which generate credits ranging from 22 to 50 percent of costs. The tangible property costs are the redevelopment (generally non-environmental) expenses, which generate credits ranging from 10 to24 percent of costs. Tangible property credits are capped as a multiplier of site preparation and groundwater remediation costs: three times the costs for most projects and six times the costs for manufacturing projects. All brownfields credits are refundable to the extent that they exceed the taxpayer’s income tax or franchise tax otherwise due. Essentially, under the Brownfields Cleanup Program, New York will pay for up to half of a project’s environmental remediation costs and a quarter of other redevelopment costs.

In recent years, the program came under criticism for allegedly excessive credit awards, which sometimes exceeded the overall costs of remediation. The program had been scheduled to expire at the end of the year, and a short-term extension of the program through March 2017 was vetoed by Governor Cuomo as not providing needed reform. The reforms package and reauthorization were enacted with the FY 2016 budget. L. 2015, ch. 56, pt. BB (S. 2006-B / A3006-B). With proposed regulations for some definitional terms pending, the reformed law came into effect for projects approved by the Department of Environmental Conservation on or after July 1, 2015. Preexisting projects are grandfathered in under the old provisions as long as they are completed by the end of 2019 (and projects approved before June 23, 2008, must be completed by the end of 2017). New projects will have until March 31, 2026, to obtain certificates of completion under the reformed Brownfields Cleanup Program.

Key reforms coming into effect include the following:

  • To address a sense that projects do not need as many incentives in the tight New York City real estate market, projects in the city now have to meet one of three special criteria to qualify for the tangible property component of the credits. This special requirement is for tangible property credits only; site preparation and groundwater remediation credits are unrestricted. The three ways to qualify are:
    • Locating the project within designated environmental zones.
    • Having a property that is “upside down” or “underutilized.” “Upside down” means that remediation costs exceed 75 percent of property value. Under the proposed regulatory definition, “underutilized” property must be more than 50 percent vacant for the past five years, require government assistance for redevelopment to be feasible and meet other criteria for being distressed.
    • Proposing an affordable housing project for the redeveloped brownfield, which generally means that the project will qualify for a federal, state or municipal affordable housing program.
  • The criteria for accepting a project into the Brownfields Cleanup Program now require that there be contamination measured at levels exceeding applicable soil cleanup objectives or other health or environmental standards. This test replaces a more subjective standard of whether development was complicated by the presence or potential presence of a contaminant.
  • The definitions of eligible site preparation costs and groundwater remediation costs now are only those necessary for investigating the property, remediating the contamination and obtaining a certificate of completion, and the definitions include numerous specific examples of qualifying costs. Essentially, these classifications are intended to reflect environmental costs only. Non-environmental costs that previously were considered site preparation costs (g., foundations) instead may count toward the tangible property credit.
  • The definition of qualifying tangible property costs was narrowed. Now, qualifying property must have a useful life 15 years or more or be non-portable equipment or structures.
  • A “BCP-EZ” program will be offered for streamlined review of remediation projects for developers that agree to waive the brownfield tax credits but want the environmental liability release of the Brownfield Cleanup Program.

Even with these reforms, New York continues to have a very attractive brownfield redevelopment program. As brownfield redevelopment is a process that lasts years, businesses interested in participating should contact their advisers about getting started on potential projects.

The Massachusetts Department of Revenue (DOR) likely will have significantly less employees starting July 1, 2015, due to a Massachusetts employee retirement incentive program.  Governor Charlie Baker recently signed legislation establishing the program on May 4, 2015 (see 2015 Mass. Acts Chapter 19, An Act Relative to State Personnel).  With more than half of DOR’s employees eligible to participate in the program, DOR is the state agency with the potential to lose the highest percentage of employees.

The program allows employees who already are eligible to retire but have not reached their maximum pension benefit to add up to five years onto their age, years of service or a combination of both, so they can retire immediately with a higher pension.  The program limits total workforce reductions in Massachusetts to 5,000 employees.  Eligible employees must submit an application to the State Board of Retirement between May 11 and June 12, 2015, to participate.  The retirement date and last day of work for approved employees will be June 30, 2015.  The Baker administration can use up to 20 percent of the savings from the retired employees to hire replacement staff, but it is unclear when such hiring will take place and how much funding will be allocated to DOR versus other state agencies affected by the program.

What does this mean for taxpayers and tax practitioners?  We are hearing that there may be a potential shortage of staff at DOR, particularly in the Audit Division.  Audits may be slowed and relationships that have been developed over years with auditors may end abruptly.  Consequently, taxpayers and their representatives might aim to quickly resolve any matters they have outstanding with DOR sooner rather than later as DOR may be forced to slow down following the reduction in staff this summer.

It is unclear what effect the program will have on the Litigation Bureau and other sections of DOR.  A loss of litigators could slow cases currently before the Appellate Tax Board.

Although disagreements may exist with various DOR positions, we are pleased with the institutional strength of DOR.  We hope that steps will be taken to retain the institutional knowledge of long time DOR personnel.

Corporations with Illinois Economic Development for a Growing Economy (EDGE) credit agreements giving credit for retained jobs can breathe a sigh of relief: The litigation challenging the state’s ability to grant EDGE credits for retained jobs has been dismissed by an Illinois Circuit Court.

Illinois EDGE credits are discretionary income tax credits awarded by the Illinois Department of Commerce and Economic Opportunity (DCEO). The credits are generated as a percentage of employee wage withholding. Sometimes DCEO has awarded credits for retained jobs as well as new jobs.

Back in January 2015, the Liberty Justice Center, acting on behalf of several taxpayers, filed a complaint alleging that it was illegal for Illinois to give credits for retained jobs. Jenner v. Illinois Department of Commerce and Economic Opportunity, No. 15-MR-16 (Cir. Ct. 7th Jud. Cir., Sangamon Cty.). The plaintiffs’ theory was that the EDGE credit statute authorized awards only for new jobs, and thus DCEO’s regulation allowing credits for retained jobs exceeded statutory authorization.

In March 2015, the state moved to dismiss for lack of standing. The plaintiffs claimed that they had standing as taxpayers challenging illegal use of state funds, but the Circuit Court now has agreed with the Attorney General: on May 12, 2015, the motion to dismiss was granted. The plaintiffs plan to appeal the decision.

This ruling is in line with the general trend of rejecting taxpayer standing in challenges to tax credit programs, including economic development tax credits. See, e.g., DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006); Arizona Christian School Tuition Org. v. Winn, 131 S. Ct. 1436 (2011).

Allied Domecq Spirits & Wines USA, Inc. v. Comm’r of Revenue, 85 Mass. App. Ct. 1125 (2014)

In a unique case, the Massachusetts Appeals Court affirmed a ruling of the Appellate Tax Board (ATB) that two corporations could not be combined for corporation excise tax purposes for 1996 through 2004. The distinctive aspect of this case was that a company was found not to have nexus with Massachusetts even though it rented property in the state and had employees in the state. If the company had been found to have nexus, it could have applied its losses to offset the income of an affiliated Massachusetts taxpayer in a combined report. The Appeals Court pointed to factual findings of the ATB that the transfer of employees located in Massachusetts to the company “had no practical economic effect other than the creation of a tax benefit and that tax avoidance was its motivating factor and only purpose.” The Massachusetts Supreme Judicial Court denied the taxpayer further review on August 1, 2014. Although this case is notable because the sham transaction doctrine rarely, if ever, has been applied to find that a company did not have nexus, a similar factual scenario likely would not occur today because Massachusetts adopted full unitary combination in 2009.

First Marblehead Corp. v. Comm’r of Revenue, 470 Mass. 497, 23 N.E.3d 892 (2015)

In a case that attracted the attention of, and an amicus brief from, the Multistate Tax Commission, the Supreme Judicial Court addressed how the property factor of a taxpayer subject to the Financial Institution Excise Tax (FIET) should be apportioned. The taxpayer, Gate Holdings, Inc. (Gate), had its commercial domicile in Massachusetts and held interests in a number of Delaware statutory trusts that purchased student loan portfolios. Below, the ATB held that Gate’s loans should be assigned to Massachusetts, resulting in a 100-percent property factor for apportionment purposes. The Supreme Judicial Court agreed and interpreted the Massachusetts sourcing provisions at issue, which are based on a model from the Multistate Tax Commission and incorporate the Solicitation, Investigation, Negotiation, Approval and Administration (SINAA) rules, as sourcing Gate’s loans to Massachusetts where Gates had its commercial domicile. The Supreme Judicial Court’s decision may be of interest in Massachusetts and other states because several states have adopted sourcing rules for financial institutions that are based on the Multistate Tax Commission’s model.

Genentech, Inc. v. Comm’r of Revenue, Mass. App. Tax Bd., Docket No. C282905, C293424, C298502, C298891 (2014)

The ATB held that Genentech, Inc., a biotechnology company, was engaged in substantial manufacturing and thus required to use single sales factor apportionment. Genentech is appealing the ruling.

National Grid Holdings, Inc. v. Comm’r of Revenue, Mass. App. Tax Bd., Docket No.  C292287; C292288; C292289 (2014); National Grid USA Service v. Comm’r of Revenue, Mass. App. Tax Bd., Docket No. C314926 (2014)

The ATB addressed whether an international utility corporation’s deferred subscription arrangements constituted debt for corporate excise purposes. The ATB held that it did not. In reaching its decision, the ATB noted that for United Kingdom tax purposes, the arrangements constituted debt; but that for United States, federal tax purposes the arrangements did not constitute debt. The ATB followed the United States federal tax treatment, which resulted in the taxpayer’s deduction of a liability against its net worth being disallowed. A few months later, in a related appeal, the ATB determined that by reporting federal changes to the Commissioner on a duplicative application for abatement, the taxpayer raised no new facts warranting a second application for abatement concerning the same assessment that was challenged earlier.

Direct, LLC v. Dep’t of Revenue, SJC-11658 (Feb. 18, 2015)

Two satellite television providers, DirecTV and Dish Network, challenged G.L. c. 64M, § 2, which imposes a five percent excise tax on satellite television services, as violating the dormant commerce clause since the tax does not apply to cable television services. The Supreme Judicial Court affirmed the Superior Court’s grant of summary judgment to the Department of Revenue. The court determined that the excise tax was not discriminatory because cable companies are subject to a variety of local government franchise fees that can be imposed at a rate of up to five percent, and that the differences between the satellite television and cable television industries, especially the heightened federal and local regulatory requirements imposed on cable providers, were significant enough to permit discrepancies in taxes imposed on the industries. The court noted that other courts have considered and rejected the satellite companies’ challenges to similar laws in other states.

Excel Orthopedic Specialists v. Comm’r of Revenue, Mass. App. Tax Bd., Docket No. C318083 (2014)

The ATB agreed with the taxpayer that braces sold by an orthopedic practice were exempt from use tax as artificial devices because the braces were individually designed, constructed or altered for the specific use of each of the taxpayer’s patients.

Regency Transportation, Inc. v. Comm’r of Revenue, Mass. App. Tax Bd., Docket No. C310361 (2014)

The ATB found a multi-state freight business liable for use tax on the full sales price of its vehicles that it stored and used in Massachusetts. In an interesting twist, the Department of Revenue attempted to assert penalties even though the taxpayer’s position was based on a departmental ruling. The ATB held that penalties should be abated for multiple reasons, including:  (i) the “taxpayer’s prior successful reliance on the ruling and the fact that its vehicles are exempt from tax in every state of purchase”; and (ii) that the “Commissioner continues to publish [the ruling] in the official compendium of public written statements without any caveat or other signal to taxpayers that its content was erroneous and should not be relied on”; and (iii) that “the Department’s own auditor with 30 years of experience came to a preliminary conclusion that [the ruling] was applicable to the [taxpayer’s] use of vehicles in the Commonwealth.”