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Massachusetts Agencies

Corporate Excise Waivers: New Law

Corporations

G.L.c. 62C, §51 (effective July 3. 2008 for tax years beginning on or after January 1, 2009) provides that any sale "otherwise than in the ordinary course of business" of all or substantially all of the assets in Massachusetts "of a business corporation as defined in section 30 of chapter 63" is subject to the excise tax.

G.L.c. 63, §30 (as effective July 3. 2008 for tax years beginning on or after January 1, 2009) defines business corporation as "any" corporation or any "other entity" as defined in G.L.c. 156D, §1.40 that is classified for the taxable year as a corporation for federal income tax purposes. The term "any" corporation would include all corporations (business and nonprofit alike) and the term "other entity" is defined in §1.40 as "any association or entity" (other than enumerated corporations), "includ[ing], without limitation, limited partnerships, general partnerships, limited liability partnerships, limited liability companies, joint ventures, joint stock companies, business trusts and profit and not-for-profit unincorporated associations."

The result here is that for sales of "all or substantially all" of the assets of any business entity occurring after tax years beginning after December 31, 2008 are subject to the excise tax lien, unless the sale is in the ordinary course of business.

In order to satisfactorily establish of record that no lien has arisen the deed should recite either:

  1. That the sale is not of all or substantially all of the assets of the entity located in Massachusetts, or
  2. That the sale is in the ordinary course of business, or (if neither of the above two statements appear in the deed)
  3. The entity is not classified as a corporation for federal income tax purposes for the taxable year in which the sale is made.

The changes in the statute don't affect how the excise law is applied, but rather to what entities it is applied to.