WITHHOLDING OF TAXES ON WAGES AND DECLARATION OF ESTIMATED INCOME TAX

M.G.L. pt. Part I, tit. Title IX, ch. c. 62B

in effect

M.G.L. c. 62B, § 1 Definitions

c. 62B, § 1. Definitions Section 1. The following words as used in this chapter shall, unless the context otherwise requires, have the following meanings:— ''Commissioner'', the commissioner of revenue. ''Internal Revenue Code'', the Internal Revenue Code of the United States as amended and in effect for the applicable year; ''Employer'', employer as defined in section thirty-four hundred and one (d) of the Internal Revenue Code; ''Employee'', employee as defined in section thirty-four hundred and one (c) of the Internal Revenue Code, except full time students engaged in seasonal, temporary or part-time employment whose estimated annual income would not exceed two thousand dollars. ''Wages'', for withholding purposes only, wages as defined in section thirty-four hundred and one (a) of the Internal Revenue Code, periodic payments and nonperiodic distributions as defined in section thirty-four hundred and five of said Code and subject to federal withholding, and contributions paid by the employer on behalf of the employee pursuant to subdivision ten of section twenty-two of chapter thirty-two or pursuant to paragraph (i) of section sixty-five D of chapter thirty-two and not otherwise included as wages above.

M.G.L. c. 62B, § 2 Duty of employer; manner of computation; duty of commissioner

c. 62B, § 2. Duty of employer; manner of computation; duty of commissioner Section 2. Every employer making payment to employees on or after February fifteenth, nineteen hundred and fifty-nine, of wages subject to tax under chapter sixty-two shall deduct and withhold a tax upon such wages in accordance with tables prepared by the commissioner which tax so withheld shall be substantially equivalent to the tax imposed by said chapter sixty-two. The commissioner may permit the use of accounting machines to calculate the proper amount to be deducted and withheld from such wages; provided, that such calculation produces substantially the tax required by said tables. If wages are paid with respect to a period which is not a pay-roll period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous pay-roll period containing a number of days, including Sundays and holidays, equal to the number of days in the period with respect to which such wages are paid. In any case in which wages are paid by an employer without regard to any pay-roll period or other period, the amount to be deducted and withheld shall be that applicable in the case of a miscellaneous pay-roll period containing a number of days equal to the number of days, including Sundays and holidays, which have elapsed since the date of the last payment of such wages by such employer during the calendar year, or the date of commencement of employment with such employer during such year, or January first of such year, whichever is the later. In determining the amount to be deducted and withheld under this section, the wages may, at the election of the employer, be computed to the nearest dollar. The commissioner may, by regulation, authorize employers to estimate the wages which will be paid to any employee in any quarter of the calendar year, to determine the amount to be deducted and withheld upon each payment of wages to such employee during such quarter as if the appropriate average of the wages so estimated constituted the actual wages paid, and to deduct and withhold upon any payment of wages to such employee during such quarter such amount as may be necessary to adjust the amount actually deducted and withheld upon the wages of such employee during such quarter to the amount that would be required to be deducted and withheld during such quarter if the pay-roll period of the employee was quarterly. The commissioner may, if he deems such action necessary for the protection of the revenue of the commonwealth, require persons other than employers: (1) to deduct and withhold taxes from payments made by such persons to residents, nonresidents and part-year residents of the commonwealth or, in the case of S corporations or entities treated as partnerships, from the distributive shares of income of such persons attributable to their shareholders or members; (2) to file withholding returns as prescribed by the commissioner; and (3) to pay over to the commissioner, or to a depositary designated by the commissioner, the taxes so required to be deducted and withheld; provided, however, that nothing in this paragraph shall authorize the commissioner to require any corporation, foundation, organization or institution that is exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code, as amended and in effect for the taxable year, to withhold taxes from persons who are not employees, except where the payments made by the exempt person for a particular performance or other event exceed $10,000. Any person other than an employer required to withhold and deduct taxes under this paragraph shall be treated as an employer for purposes of sections 5 through 12. The commissioner may provide by regulation, under such conditions and to such extent as he deems proper, for withholding in addition to that otherwise required under this section in cases in which the employer and the employee agree to such additional withholding. Such additional withholding shall for all purposes be considered a tax required to be deducted and withheld under this chapter. Every person, including the United States, the commonwealth or any other state, or any political subdivision or instrumentality of the foregoing, making any payment of lottery winnings which are subject to tax under chapter 62 and which are subject to withholding under section 3402 of the Internal Revenue Code, without the exception for keno and bingo in subsections (q)(5) and (r) of said section 3402 of the Internal Revenue Code, shall deduct and withhold from such payment an amount equal to 5 per cent of such payment, except that such withholding for purposes of this chapter shall apply to payments of winnings of $600 or greater notwithstanding any contrary provision of the Internal Revenue Code. For the purposes of this chapter and chapter 62C, such payment of winnings shall be treated as if it were wages paid by an employer to an employee. Every person who is to receive a payment of winnings which is subject to withholding under this section shall furnish to the person making such payment a statement, made under penalties of perjury, containing the name, address and taxpayer identification number of the person receiving the payment and of each person entitled to any portion of such payment. A person at a gaming establishment licensed in accordance with chapter 23K making a payment of winnings of $1,200 or more from slot machine play shall file a form W–2G with respect to such payment. A person making a payment of winnings of $600 or more from pari-mutuel wagering shall file a form W–2G with respect to such payment if the proceeds are at least 300 times as large as the amount wagered. For purposes of this section, in determining whether winnings equal or exceed the $1,200 or $600 amounts, the amount of winnings shall not be reduced by the amount wagered. A person making a payment of winnings from wagering at a gaming establishment, from sports wagering under chapter 23N or from pari-mutuel wagering which are subject to tax under chapter 62 and subject to withholding under section 3402 of the Internal Revenue Code shall deduct and withhold an amount equal to 5 per cent of such payment. A person who is to receive a payment of winnings which are subject to withholding shall furnish the person making such payment a statement, made under the penalties of perjury, containing the name, address, and taxpayer identification number of the person receiving the payment and of each person entitled to any portion of that payment. Notwithstanding any general or special law to the contrary, any review or transmission of information required to be done by a gaming licensee or sports wagering operator relative to the disbursement of cash or prize winnings shall be administered consistent with this paragraph and based upon real-time information. If, at the time an unemployment compensation payment, as defined in section 85(b) of the Internal Revenue Code, is made to any person, an election by such person is in effect under clause (3) of subsection (a) and under subsection (c) of section twenty-nine E of chapter one hundred and fifty-one A to subject such payment to voluntary withholding of personal income tax, then for purposes of this chapter such payment shall be treated as if it were a payment of wages by an employer to an employee. The amount to be deducted and withheld under this chapter from such payments shall be the amount set forth in said subsection (c) of said section twenty-nine E.

M.G.L. c. 62B, § 3 Wages; clarification

c. 62B, § 3. Wages; clarification Section 3. If the remuneration paid by an employer to an employee for services performed during one half or more of any pay-roll period of not more than thirty-one consecutive days constitute wages, all the remuneration paid by such employer to such employee for such period shall be deemed to be wages; but if the remuneration paid by an employer to an employee for services performed during more than one half of any such pay-roll period does not constitute wages, then none of the remuneration paid by such employer to such employee for such period shall be deemed to be wages.

M.G.L. c. 62B, § 4 Withholding exemption certificates; duty of employee to furnish; forms

c. 62B, § 4. Withholding exemption certificates; duty of employee to furnish; forms Section 4. (a) Every employee on or before the date of commencement of employment shall furnish his employer with a signed withholding exemption certificate setting forth the number of dependency exemptions which he claims, which shall in no event exceed the number to which he is entitled under chapter sixty-two plus one for his own personal exemption under said chapter. The term ''dependency exemptions'', as used in this chapter, shall include an exemption for a spouse meeting the requirements of chapter sixty-two. If any employee fails to furnish such signed certificate, the number of his exemptions shall be considered zero. (b) Withholding exemption certificates shall take effect as of the beginning of the first pay-roll period ending, or as of the time of the first payment of wages made without regard to pay-roll period, on or after the date on which such certificate is so furnished; provided, that certificates furnished before February fourteenth, nineteen hundred and fifty-nine, shall be considered as furnished on that date. Each such certificate shall continue in effect with respect to the employer to whom it was submitted until another such certificate shall take effect under this paragraph. If a withholding exemption certificate is furnished to take the place of an existing certificate, the employer may, at his option, continue the old certificate in force with respect to all wages paid on or before the first status determination date which occurs at least thirty days after the date on which such new certificate is furnished. For the purpose of this paragraph, the term ''status determination date'' means January first and July first of each year. (c) If, on any day during the calendar year, the number of dependency exemptions to which the employee is entitled is less than the number of dependency exemptions claimed by the employee on the withholding exemption certificate then in effect with respect to him, the employee shall, within ten days thereafter, furnish the employer with a new withholding exemption certificate relating the number of dependency exemptions which the employee then claims, which shall in no event exceed the number to which he is entitled on such day. If, on any day during the calendar year, the number of dependency exemptions to which the employee is entitled to is greater than the number of dependency exemptions claimed, the employee may furnish the employer with a new withholding exemption certificate relating to the number of dependency exemptions which the employee then claims which shall in no event exceed the number to which he is entitled on such day. (d) If, on any day during the calendar year, the number of dependency exemptions to which the employee may reasonably by expected to be entitled at the beginning of the next calendar year is different from the number of dependency exemptions to which the employee is entitled on such day, the employee shall in such cases and at such times as the commissioner may by regulation prescribe, furnish the employer with a withholding exemption certificate relating to the number of dependency exemptions which he claims with respect to such next calendar year, which shall in no event exceed the number to which he may reasonably be expected to be so entitled. Withholding exemption certificates issued pursuant to this paragraph shall not take effect with respect to any payment of wages made in the calendar year in which the certificate is furnished. (e) Withholding exemption certificates shall be in such form and contain such information as the commissioner shall prescribe. (f) If the commissioner finds that an employee has no reasonable basis for the number of dependency exemptions claimed in the exemption certificate filed with his employer, the commissioner shall determine the proper number of dependency exemptions to which such employee is entitled, and shall so notify the employer. Upon such notification, the employer shall use the number of dependency exemptions determined by the commissioner with respect to any payment of wages thereafter made to such employee.

M.G.L. c. 62B, § 5 Statement to employee; requisite information; failure of employer to withhold or pay over withheld taxes; liability

c. 62B, § 5. Statement to employee; requisite information; failure of employer to withhold or pay over withheld taxes; liability Section 5. Every employer required to deduct and withhold from an employee or payee a tax under section 2 or who would have been required under said section 2 in the case of an employee to deduct and withhold a tax if the employee had not claimed any personal exemption or dependency exemptions, shall furnish to each such employee or payee in respect of the wages or other payments paid by such employer to such employee or payee during the calendar year, on or before January 31 of the succeeding year, or, if an employee's employment is terminated before the close of such calendar year, within 30 days from the day on which the last payment of wages shall be made, a written statement in duplicate showing the name of the employer, the name of the employee or payee and the social security number of the employee or payee, if any, the total amount of wages or other amounts subject to taxation under chapter 62 and the total amount deducted and withheld as tax. The statement shall contain such other information as the commissioner may prescribe. The commissioner may grant reasonable extensions of time, not exceeding 60 days, for the furnishing of the statement. An employer who fails to withhold or pay to the commissioner any sum required by this chapter to be withheld or paid shall be personally and individually liable therefor to the commonwealth. The term ''employer,'' as used in this section and in section 11, shall include a person or entity required to withhold tax from a payee, an officer or employee of a corporation or a member or employee of a partnership or limited liability company who, as such officer, employee or member is under a duty to withhold and pay over taxes in accordance with this section and section 2. Any sum withheld in accordance with said section 2 shall be considered to be held in trust for the commonwealth. If an employer in violation of this chapter fails to withhold the tax in accordance with section 2 and thereafter the tax against which such tax may be credited pursuant to section 9 is paid, the tax so required to be withheld shall not be collected from the employer; provided, however, that this paragraph shall not relieve the employer from liability for any penalties or additions to the tax otherwise applicable in respect of such failure to withhold.

M.G.L. c. 62B, § 6 Failure of employer to withhold, or to pay over taxes withheld; assessment

c. 62B, § 6. Failure of employer to withhold, or to pay over taxes withheld; assessment Section 6. In the event an employer fails to withhold and pay over to the commissioner any amount required to be withheld under section two, such amount shall be assessed against such employer, under the provisions of sections twenty-six to twenty-nine inclusive, of chapter sixty-two C.

M.G.L. c. 62B, § 7 Failure to withhold or pay over taxes; effect; penalty

c. 62B, § 7. Failure to withhold or pay over taxes; effect; penalty Section 7. (a) Whenever any employer fails to deduct and withhold taxes, file returns relating thereto, or pay over such taxes to the commissioner at the time and in the manner prescribed by this chapter or by chapter sixty-two C or by any regulation issued thereunder, and is notified, by notice delivered in hand to such employer, of any such failure, then all the requirements of paragraph (b) shall be complied with. In the case of a corporation, partnership or trust, notice delivered in hand to an officer, partner or trustee, shall, for the purposes of this section be deemed to be notice delivered in hand to such corporation, partnership or trust and to all officers, partners, trustees and employees thereof. (b) Any employer who is required by this chapter or by chapter sixty-two C to deduct and withhold taxes, file returns relating thereto and pay over such taxes to the commissioner, if notice has been delivered to such employer in accordance with paragraph (a), shall withhold the taxes required by section two to be withheld after the delivery of such notice, and, not later than the end of the second banking day after any amount of such taxes is withheld, deposit the same in a separate account in a national bank doing business in the commonwealth or in a trust company chartered by the commonwealth, and shall keep the amount of such taxes so withheld in such account until payment over to the commissioner. Any such account shall be designated as a special fund in trust for the commonwealth, payable to the commonwealth by such employer as trustee. (c) Whenever the commissioner is satisfied, with respect to any notification made under paragraph (a), that all the requirements of this chapter and of section ten of chapter sixty-two C and the regulations thereunder will thereafter be complied with, he may cancel such notification. Such cancellation shall take effect at such time as is specified in the notice of such cancellation. (d) Any employer who fails to comply with any provisions of paragraph (b) shall, in addition to any other penalties provided by law, be punished by a fine of not less than one hundred nor more than five thousand dollars, or by imprisonment for not more than one year, or both. (e) This section shall not apply to any employer who shows that there was reasonable doubt as to whether the law required the withholding of tax, or as to who was required by law to withhold the tax, and shall not apply to any employer who shows that his failure to comply with the provisions of paragraph (b) was due to circumstances beyond his control. For the purposes of the preceding sentence, a lack of funds existing immediately after the payment of wages, whether or not created by the payment of such wages, shall not be considered to be circumstances beyond the control of an employer.

M.G.L. c. 62B, § 9 Credit against taxes

c. 62B, § 9. Credit against taxes Section 9. The amount deducted and withheld as tax under section two during any calendar year upon the wages of any employee shall be allowed as a credit to the recipient of the income against the tax imposed thereon. If more than one taxable year begins in such calendar year, such amount shall be allowed as a credit against the tax for the last year so beginning.

M.G.L. c. 62B, § 10 Employer's liability

c. 62B, § 10. Employer's liability Section 10. An employer shall be liable for the payment of the tax required to be withheld under section two, and shall not be liable, except as provided in section five, to any person for the amount of any such payment.

M.G.L. c. 62B, § 11A Penalties

c. 62B, § 11A. Penalties Section 11A. In addition to any criminal penalty provided by law, if (1) any individual makes a statement under section four which results in a decrease in the amount deducted or withheld under this chapter, and (2) as of the time of such statement was made, there was no reasonable basis for such statement, such individual shall pay a penalty of five hundred dollars for such statement. Said penalty shall be paid upon notice by the commissioner and shall be assessed and collected in the same manner as a tax. The commissioner may waive, in whole or in part, the penalty imposed under this section if the taxes imposed with respect to the individual under chapter sixty-two for the taxable year are equal to or less than the sum of the credits against such taxes allowed by chapter sixty-two and this chapter.

M.G.L. c. 62B, § 12 Effect of payment

c. 62B, § 12. Effect of payment Section 12. All taxes deducted and withheld by an employer and paid over to the commissioner pursuant to section five shall be deemed and credited as payments on account of the tax imposed on income for the taxable year under chapter sixty-two.

M.G.L. c. 62B, § 13 Amount of estimated tax

c. 62B, § 13. Amount of estimated tax Section 13. Every taxpayer who in any taxable year can reasonably expect to receive income taxable under chapter sixty-two from sources other than wages upon which a tax is required to be withheld under section two and for whom the amount of estimated tax is more than $400 shall make payments of estimated tax pursuant to section fourteen. For the purposes of this section, the amount of estimated tax shall be the amount which the taxpayer estimates as the tax due under chapter sixty-two with respect to the taxable year reduced by the total amount of the credits allowed under section 6 of chapter 62 to which the taxpayer estimates he will be entitled and further reduced by the amount which the taxpayer estimates as the credits to which he will be entitled under section nine for taxes withheld during the taxable year.

M.G.L. c. 62B, § 14 Underpayment of estimated tax; installments

c. 62B, § 14. Underpayment of estimated tax; installments Section 14. (a) Except as otherwise provided in this section, in the case of any underpayment of estimated tax, there shall be added to the tax due under chapter sixty-two for the taxable year an amount determined at the rate but without daily compounding and on a per annum basis established under section thirty-two of chapter 62C upon the amount of the underpayment for the period of underpayment. (b) For purposes of subsection (a), the amount of the underpayment shall be the excess of the required installment, over the amount, if any, of the installment paid on or before the due date for the installment; and the period of the underpayment shall run from the due date for the installment to the fifteenth day of the fourth month following the close of the taxable year, or, with respect to any portion of the underpayment, the date on which such portion is paid, whichever is the earlier. A payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid. (c) For purposes of this section, there shall be four required installments for each taxable year. The first installment shall be paid on April fifteenth of the taxable year, the second on June fifteenth of the taxable year, the third on September fifteenth of the taxable year, and the fourth on January fifteenth of the succeeding taxable year. The amount of any required installment shall be twenty-five per cent of the required annual payment. The term ''required annual payment'' means the lesser of (i) eighty per cent, or sixty-six and two-thirds per cent in the case of a farmer or fisherman as defined in subsection (h), of the tax shown on the return for the taxable year or, if no return is filed, eighty or sixty-six and two-thirds per cent, as the case may be, of the tax for such year, or (ii) one hundred per cent of the tax shown on the return of the taxpayer for the preceding taxable year, provided the taxpayer filed a return for the preceding taxable year and such preceding year was a taxable year of twelve months. In the case of any required installment, if the taxpayer establishes that the annualized income installment is less than the amount determined under this subsection, the amount of such required installment shall be the annualized income installment, and any reduction in a required installment resulting therefrom shall be recaptured by increasing the amount of the next required installment or installments. The annualized income installment shall be based upon an estimated tax computed by placing on an annualized basis the taxable income for months in the taxable year ending before the due date for the installment. (d) No addition to tax shall be imposed under subsection (a) for any taxable year if— (i) the tax shown on the return for the taxable year less the amount of the credits allowed by section 9 of this chapter and section 6 of chapter 62 is less than $400 or, if no return is filed, the amount of tax less the amount of the credits allowed by section 9 of this chapter and section 6 of chapter 62 is less than $400. (ii) the preceding taxable year was a taxable year of twelve months, the taxpayer did not have any liability for tax for the preceding taxable year, and the taxpayer was an inhabitant of the commonwealth throughout the preceding taxable year. (e) No addition to tax shall be imposed under subsection (a) with respect to any underpayment— (i) to the extent the commissioner determines that by reason of casualty, disaster, or other unusual circumstances the imposition of such addition to tax would be against equity and good conscience; or (ii) if the commissioner determines that the taxpayer retired after having attained age sixty-two or became disabled in the taxable year for which estimated payments were required to be made or in the taxable year preceding such taxable year, and such underpayment was due to reasonable cause and not to willful neglect. (f) For the purpose of applying this section the estimated tax shall be computed without any reduction for the amount which the individual estimates as his credit under section nine, and the amount of the credit allowed under said section nine for the taxable year shall be deemed a payment of estimated tax, and an equal part of such amount shall be deemed paid on each installment date, as indicated in subsection (c), unless the taxpayer establishes the dates on which all amounts were actually withheld, in which case the amounts so withheld shall be deemed payments of estimated tax on the dates on which such amounts were actually withheld. (g) For the purposes of this section, the term ''tax'' means the tax imposed by chapter sixty-two and by any act in addition thereto, reduced by the credits against tax allowed by section six of said chapter sixty-two. (h) If, on or before March first of the following taxable year, a taxpayer who is a farmer or fishermen files a return for the taxable year and pays in full the amount computed on the return as payable then no addition to tax shall be imposed under subsection (a) with respect to any underpayment of estimated tax required to be made under this section. For the purposes of this subsection, an individual is a farmer or fisherman for any taxable year if his gross income from farming or fishing for the taxable year, or as shown on his return for the preceding taxable year, is at least two-thirds of his total gross income for the taxable year.

M.G.L. c. 62B, § 15 Credit on estimated tax payments

c. 62B, § 15. Credit on estimated tax payments Section 15. All payments of estimated tax made by any taxpayer pursuant to section thirteen shall be deemed and credited as payments on account of the tax imposed on income for the taxable year under chapter sixty-two, and any taxes in addition thereto.

Source: Massachusetts General Court (malegislature.gov)URL: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62BFetched: 10/20/2026