Massachusetts taxpayers impacted by the state’s recent conformity changes now have additional guidance from the Massachusetts Department of Revenue (MA DOR) regarding how to obtain penalty and interest relief.
As discussed in our previous article, “Massachusetts’ §174A Decoupling: New State Research & Experimental Expenditure Rules,” the Massachusetts Supplemental Budget enacted in June required taxpayers seeking relief related to conformity changes to file amended returns within 90 days of enactment, establishing a September 10, 2026, deadline.
New Filing Requirements for Extended Returns
MA DOR has clarified that business corporations with a valid extension that have not yet filed their 2025 return may still seek penalty and interest relief related to the conformity changes by including additional disclosures with their original return.
Taxpayers must attach:
- Massachusetts Schedule M-2220 (Underpayment of Massachusetts Estimated Tax by Corporations); and
- Massachusetts Schedule TDS (Taxpayer Disclosure Statement), including:
- The statement: “Taxpayer is applying for relief related to Massachusetts conformity with the provisions of federal law P.L. 119-21”;
- A clear identification of the applicable Internal Revenue Code provision(s) being adjusted; and
- An explanation of how the adjustment was calculated and reflected on Schedule M-2220.
Conformity Provisions Affected
The guidance applies to several federal conformity changes, including:
- Domestic Research and Experimental Expenditures under IRC §§174 and 174A
- Special Depreciation Allowance for Qualified Production Property under IRC §168(n)
- Increased expensing limits under IRC §179
- Modifications to the business interest expense limitation under IRC §163(j)
- Changes affecting Qualified Opportunity Zone investments under IRC §1400Z-2
The same disclosure statement requirements also apply to amended returns for tax years 2022 through 2025 that are filed to reflect these conformity changes.
Relief May Still Be Available
For taxpayers that previously filed but did amend in time to meet the September 10 deadline, relief may still be available.
According to MA DOR, the administration has introduced legislation that would extend the deadline to amend and seek relief of interest and penalties. In the meantime, the agency has stated that it has been directed to suspend penalties and interest for affected taxpayers while the proposed extension is considered.
What Taxpayers Should Do Now
Businesses affected by Massachusetts conformity changes should review their 2025 returns and any previously filed returns for 2022 through 2025 to determine whether additional disclosures or amendments may be necessary. Given the evolving guidance, taxpayers should work closely with their advisors to ensure filings properly document the applicable conformity adjustments and preserve eligibility for available relief.
For additional details, review the Massachusetts Department of Revenue’s guidance on business taxes affected by the June Supplemental Budget HERE.
Need assistance? The Bonadio Group’s State & Local Tax professionals can help evaluate the impact of Massachusetts’ conformity changes, prepare required disclosures, and navigate the latest filing requirements. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
