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                              ETM
PETIETN SE                    E I EVO
         PLACIDAM SVB LIBERTAT

                                            Commonwealth of Massachusetts                          Department of Revenue

                                     2020 Instructions

                                     for Massachusetts

                                     Financial Institution

                                     Excise Return

                                     Form 63-FI

                                     Massachusetts has an electronic filing requirement for this
                                     form. See TIR 16-9 for further information.

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All financial institutions subject to Massachusetts  ness entities subject to the corporate and finan-  Filing Due Dates
General Laws (MGL) ch 63, §§ 1 through 2B that       cial institution excise. In response to the TCJA,  Massachusetts General Laws (MGL) ch 62C, §§
engage in any or all of their business in Mass-      DOR issued written guidance addressing the im-     11 and 12 require C corporations to file their tax
achusetts and are not part of a combined group       pact of the TCJA in Massachusetts. See e.g., TIR   returns on or before the 15th day of the fourth
are required to file Form 355U must complete and     19-17: Application of IRC § 163(j) Interest Ex-    month following the close of each taxable year
file Massachusetts Form 63-FI.                       pense Limitation to Corporate Taxpayers, TIR 19-   (April 15 in the case of corporations filing on a
Financial institutions that are members of a com-    11: Legislation Impacting the Massachusetts Tax    calendar year basis). The filing due date for S cor-
bined group engaged in a unitary business are re-    Treatment of Selected International Provisions of  poration tax returns is the 15th day of the third
quired to file a combined return under MGL ch 63,    the Federal Tax Cuts and Jobs Act, TIR 19-9: Ex-   month following the close of each taxable year.
§ 32B. See 830 CMR 63.32B.2 for additional in-       tension of Time to File Short-Year Returns Result- See TIR 17-5.
formation. A financial institution that is a member  ing from Partnership Technical Termination, TIR
of such a combined group files Form 355U in-         19-7: Massachusetts Treatment of Investments in    For most calendar year filers, returns are due
stead of Form 63-FI. Financial institutions that are Qualified Opportunity Zones, and TIR 19-6: Im-     April 15, 2021.
not members of such a group are not allowed to       pact of the Federal Tax Cuts and Jobs Act on a
participate in the filing of combined returns. For   Taxpayer’s Overall Method of Accounting for
additional details regarding combined reporting      Massachusetts Purposes. All of these TIRs are      General Instructions
requirements, see the Form 355U Instructions.        available on DOR’s website.                        Who Must File and Pay the Financial
                                                                                                        Institution Excise?
                                                     Employees Working Remotely due                     The Massachusetts financial institution excise ap-
Major 2020 Tax Law                                   to COVID-19: Massachusetts Tax                     plies to banks, trust companies and federal or
                                                     Implications                                       state savings and loan associations existing by au-
Changes                                              Massachusetts declared a state of emergency and    thority of the United States, any state, or a foreign
                                                     issued several health and safety related restric-  country. It also applies to bank holding companies
Federal Conformity                                   tions in response to the 2019 novel Coronavirus    and subsidiaries of bank holding companies, sav-
Massachusetts generally follows the Internal Rev-    (“COVID-19”) pandemic. As a result, many busi-     ings and loan holding companies, corporations
enue Code (IRC) as currently in effect for Mass-     nesses implemented work-from-home require-         subject to supervision by the Massachusetts Di-
achusetts corporate excise tax purposes. For         ments for their employees. DOR has provided        vision of Banks or other corporations in substan-
more up-to-date and detailed information on tax      Massachusetts tax relief in situations in which    tial competition with financial institutions in
changes and federal conformity please see the        employees work remotely due solely to the          Massachusetts which derive more than 50% of
dedicated 2020 Tax Changes page on our website       COVID-19 pandemic to minimize disruption for       their gross income from loan origination, lending
at https://www.mass.gov/orgs/massachusetts-          corporations doing business in Massachusetts.      activities or credit card activities. Credit unions
department-of-revenue.                               See 830 CMR 62.5A.3: Massachusetts Source In-      are not subject to the excise. See the definition of
                                                     come of Non Residents Telecommuting due to         financial institution in MGL Ch 63, § 1.
Coronavirus Aid, Relief, and                         the COVID-19 Pandemic, and TIR 20-15: Revised      The minimum excise for a financial institution is
Economic Security Act                                Guidance on the Massachusetts Tax Implications     $456 and cannot be prorated.
On March 27, 2020, Public Law 116-136, the           of an Employee Working Remotely due to the
Coronavirus Aid, Relief, and Economic Security       COVID-19 Pandemic. These rules are effective       What is Nexus for Purposes of the
Act (the CARES Act), was signed into law. The        until 90 days after the state of emergency in      Massachusetts Financial Institution
CARES Act provides for federal changes to a va-      Massachusetts is lifted.                           Excise?
riety of provisions of the Internal Revenue Code     DOR will not consider the presence of one or       The financial institution excise applies to any finan-
(IRC) that affect business entities subject to the   more employees working remotely from Mass-         cial institution engaged in business in Massachu-
corporate and ﬁnancial institution excise. In re-    achusetts solely due to a Pandemic-Related Cir-    setts. Engaged in business as defined in MGL ch
sponse to the CARES Act, the Department of Rev-      cumstance, including the presence of business      63, § 1 includes:
enue (DOR) issued TIR 20-9: Massachusetts Tax        property reasonably needed for such persons’
Implications of Selected Provisions of the Federal   use while working remotely, to be sufficient in
CARES Act, which addresses various provisions        and of itself to establish corporate nexus and a
that are specific to corporations and small busi-    corporate excise filing requirement. In addition,
nesses including (1) small business loan forgive-    such presence will not, of itself, cause a corpora-
ness, (2) modifications to the federal limitations   tion to lose the protections of Public Law 86-272.
on net operating losses, (3) modifications to lim-   Relatedly, for corporate apportionment purposes,
itation on business interest deduction, (4) techni-  (i) services performed by such persons in Mass-
cal amendments regarding qualified improvement       achusetts will not increase the numerator of the
property, and (5) modification of limitation on      employer’s payroll factor, and (ii) the presence in
charitable contributions during 2020. TIR 20-9 is    Massachusetts of business property reasonably
available on DOR’s website.                          needed for such persons’ use while working re-
                                                     motely will not increase the numerator of the em-
Tax Cuts and Jobs Act                                ployer’s property factor.
The Tax Cuts and Jobs Act (TCJA) also changed
a variety of provisions of the IRC that affect busi-

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No text to extract.

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setts and the denominator of which is the gross stitution rate of 9% but all other income of the S to compute its net income subject to tax and its
income from all such assets and activities. corporation is taxable at a lower rate and is not income measure along with the other members
If the taxpayer elects or is required by DOR to use subject to tax at the corporate level if receipts are of the group on Form 355U. A financial institution
the gross income method, the taxpayer must use less than $6,000,000. S corporation (or any financial institution) that is
this method on subsequent returns unless the tax- Financial institution S corporations with receipts a member of a unitary group is not required to
payer receives permission or the Department re- of $9,000,000 or more pay an income measure calculate a separate non-income measure.
quires a different method. of excise at a rate of 4.0% on income allocated or Further, even where a financial institution S cor-
Property factor. Valuation of All Property Owned apportioned to Massachusetts. S corporations poration is not itself liable for an income measure
(Form 63-FI, Schedule E, line 2e). The average with receipts of at least $6,000,000 but less than of excise, it is required to include its income in a
value of property owned by the taxpayer is com- $9,000,000 pay tax at a rate of 2.67%. S corpo- combined report if any member of the combined
puted on an annual basis by adding the value of rations with receipts of less than $6,000,000 are group is a C corporation that is subject to Mass-
the property on the first day of the taxable year not subject to the income measure of excise. Fi- achusetts tax. Where one or more S corporations
and the value of the property on the last day of nancial institution S corporations must calculate that are taxable in Massachusetts are members of
the taxable year and dividing the sum by two. If the tax using the correct rate. a combined group that is composed entirely of S
averaging on this basis does not properly reflect To determine if an S corporation is liable for the corporations and the S corporations are not liable
average value, the taxpayer may elect or DOR income measure of the corporate excise, com- for the income measure of excise, the S corpora-
may require averaging on a more frequent basis. plete Massachusetts Schedule S, lines 1 through tions are not required to file Form 355U. Further,
A taxpayer electing to average on a more frequent 17. If line 17 of Schedule S is at least $6,000,000, where one or more S corporations that are taxable
basis must use the same method of valuation an income measure of corporation excise will be in Massachusetts are members of a combined
consistently with respect to property inside and due. If line 17 of Schedule S is less than group that is composed entirely of one or more S
outside of Massachusetts and on all subsequent $6,000,000, Form 63-FI, Schedule E is not re- corporations and one or more C corporations and
returns unless the taxpayer receives permission quired. If an S corporation and any other entity the S corporations are not liable for the income
or DOR requires a different method of determin- share common ownership and are engaged in a measure of the excise and each of the C corpora-
ing average value. unitary business, then the total receipts less inter- tions is not taxable in Massachusetts, the S cor-
company transactions of all such entities must be porations are not required to file Form 355U.
Elections Requiring Prior Approval from combined according to the rules of 830 CMR (Note that in the latter cases, Form 355U would
the Department 62.17A.1(11)(e) and (f), to determine the dollar be required irrespective as to whether the S cor-
Property factor. The average value of rented prop- amount of such S corporation’s total receipts. porations were liable for the income measure of
erty (real or tangible) is generally determined an- Total receipts means gross receipts or sales, less the excise if one or more of the C corporations
nually by multiplying the gross rents payable returns and allowances, and includes dividends, were subject to Massachusetts tax).
during the taxable year by eight. A financial insti- interest, royalties, capital gain net income, rental In any case where one or more S corporations that
tution which believes that this general method re- income and all other income. are members of a combined group are not re-
sults in inaccurate valuations of rented property If an S corporation that is liable for the income quired to file Form 355U, such members are also
may apply to use any other method which prop- measure is not part of a combined group (see be - not required to complete Form 63-FI, Schedule A.
erly reflects the value. The taxpayer should make low), it must complete Massachusetts Schedule A financial institution S corporation that is a mem-
this request by submitting Form AA-1. A taxpayer A with Form 63-FI and must complete a pro- ber of a combined group filing form 355U must
that has been unable to obtain prior approval of forma U.S. Form 1120 which must be available also file an informational Form 63-FI for the pur-
an alternative method of valuation of rental prop- upon request. A financial institution S corporation pose of submitting Schedules S and SK-1. Such
erty should use the statutory method of valuing that is not liable for an income measure of excise a corporation completes Form 63-FI, Schedule E,
rental property on its return and submit Form AA- must still file Form 63-FI but must enter 0 on line if required to determine shareholder income de-
1 describing the proposed alternative method. If 1 of the tax calculation and is not required to rived from sources within the Commonwealth,
the alternative method is approved by DOR, a re- complete Schedules A, B or D. A financial institu- without regard to the combined reporting appor-
fund of any overpayment, with interest, if due, will tion S corporation must always complete Sched- tionment rules. An S corporation subject to this
be made. ule S and submit Schedules SK-1 and is liable for requirement does not report on Schedule A any
If an alternative method of valuing rented property the minimum excise of $456. income included in the combined report. The fil-
is approved, that method must be used on all sub- ing due date for the pro-forma return (as with
sequent returns unless the taxpayer receives prior When is a Financial Institution S Corpora - other S corporation returns) remains the 15th day
approval or DOR requires a different method. tion Required to Participate in a Combined of the third month following the close of each tax-
Report? able year. See TIR 17-5.
S Corporation Financial Institutions A financial institution S corporation that is doing
Financial institutions that are S corporations for business in Massachusetts is subject to combined When Are Returns Due?
federal purposes are taxed as financial institution reporting, within the meaning of MGL ch 63, § Most financial institution excise returns, together
S corporations. Items of S corporation income, 32B, when it is engaged in a unitary business with with payment in full of any tax due, must be filed
loss and deduction are passed through the S cor- one or more other corporations, including one or on or before the 15th day of the fourth month after
poration to the shareholders, and reported and more financial institution S corporations. In such the close of the taxable year, calendar or fiscal. Fi-
taxed on their return. Financial institution S cor- cases, if the financial institution S corporation is nancial institution S corporation excise returns, like
porations with income that is taxed to the S cor- liable for an income measure of excise it is re- all other S corporation returns, must still be filed
poration for federal income tax purposes is still quired to be included in a combined report and is on or before the 15th day of the third month after
taxable on such income at the regular financial in- the close of the taxable year, calendar or fiscal. See

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TIR 17-5. Financial institution S corporations that      ovals; enclose a complete copy of the federal
are members of a combined group generally file           audit report and supporting schedules.
on or before the 15th day of the fourth month but
see 830 CMR 62C.11.1 for important exceptions.           Consent to Extend the Time to Act on an
                                                         Amended Return treated as Abatement
Taxpayers meeting certain payment requirements           Application
will be given an automatic seven-month exten-            In certain instances, an amended return showing
sion in the case of financial institution taxpayers      a reduction of tax may be treated by DOR as an
filing combined reports, and a six-month exten-          abatement application. Under such circumstances,
sion for other taxpayers. For further information,       by filing an amended return, you are giving your
see TIR 15-15.                                           consent for the Commissioner of Revenue to act
Note: An automatic extension of time to file is not      upon the abatement application after six months
valid if the financial institution fails to pay at least from the date of filing. See TIR 16-11. You may
50% of the total tax liability or the minimum tax        withdraw such consent at any time by contacting
of $456, whichever is greater, through estimated         DOR in writing. If consent is withdrawn, any re-
payments or with an extension payment on or be-          quested reduction in tax will be deemed denied
fore the original due date of the return.                either at the expiration of six months from the
Any tax not paid on or before the due date — with-       date of filing or the date consent is withdrawn,
out regard to the extension — shall be subject to        whichever is later.
an interest charge.                                      Filing an Application for Abatement
Financial Institution S corporations that are par-       File an Application for Abatement, Form ABT, only
ticipating in a combined report of their net income      to dispute one of the following: 
to Massachusetts must file Form 355U. For more
information, see 830 CMR 62C.11.1.
In addition, a financial institution S corporation
that is a member of a combined group filing Form
355U must also submit Form 63-FI as an infor-
mational return, enclosing Schedules S and SK-
1, although no additional tax is due with that
filing. Such informational filing is due on or be-
fore the 15th day of the third month after the
close of the taxable year, calendar or fiscal.
Filing an Amended Return
If you need to change a line item on your return,
complete a return with the corrected information
and fill in the Amended return oval. An amended
return can be filed to either increase or decrease
your tax. Generally, an amended return must be
filed within three years of the date that your origi-
nal return was filed. Electronic filing requirements
apply to amended returns and disputes. See TIR
16-9 for further information.
Federal Changes
If this is an amended Massachusetts return and it
does not report changes that result from the filing
of a federal amended return or from a federal audit
(for example, if the amended Massachusetts return
is reporting only a change in the apportionment
calculation or an additional tax credit), fill in only
the Amended return  oval. If this is an amended
return that includes changes you have reported
on an amended federal return filed with the IRS
for the same tax year, fill in both the Amended
return and the  Federal amendment ovals. If the
amended Massachusetts return incorporates
changes that are the result of an IRS audit, fill in
both the Amended return and    Federal audit

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What is a Proper Return? how to complete the Schedule CMS and claim the Section 2. Refundable Credits
A proper return is a return upon which all required credits. Section 2 is for reporting refundable credits the
amounts have been entered in all appropriate items Credits reported on the Schedule CMS are gener- taxpayer is using to request a refund. The Film In-
on all forms. Data sheets, account forms or other ally identified either by a certificate number as- centive Credit should always be included in Sec-
schedules may be attached to explain amounts signed by the issuing agency (which may be the tion 2 to the extent that the taxpayer is requesting
entered on the forms. A subchapter S corporation DOR) or by the tax period end date in which the a refund. However, a taxpayer that received a re-
should include Schedule S and Schedule SK-1. credit originated. If a credit has been assigned a fundable credit on a Massachusetts K-1 from a
Referencing items to enclosures in lieu of enter- certificate number, the certificate number must be pass-through entity or a credit transfer should re-
ing amounts onto the return is not sufficient. included on the Schedule CMS. A taxpayer that port such credit in Section 4, to the extent that
A properly filed return must also include exact and does not include an assigned certificate number the taxpayer is requesting a refund. For each re-
complete copies of the financial institution’s U.S. on the Schedule CMS will not be allowed the fundable credit, report the amount of the credit
Form 1120, 1120S, 1120-REIT or other federal re- credit on the tax return and will have their tax lia- available after taking into consideration any
turn as filed. Copies of all accompanying sched- bility adjusted by the DOR. Be sure to omit hy- amount of the credits that may have been taken
ules and supplemental statements to the federal phens, spaces, decimals and other special to offset a tax or shared as reported in Section 1
return must be enclosed. symbols when entering the certificate number. of this schedule. Enter the amount by which the
Also, enter the number from left to right. available credit balance is being reduced and the
amount to be treated as a refundable credit,
Disclosure Schedule Likewise, a taxpayer that is required to complete which may be either 90% or 100% of the reduc-
Form 63-FI requires the taxpayer to enter certain a separate schedule to claim a credit must include tion. See TIR 13-6, Example 3, for an illustration.
information from its federal return. DOR has been the separate schedule with the taxpayer’s return
mandated by statute to collect and annually report filing. Failure to do so may result in the credit Section 3. Non-Refundable Credits
aggregate information about financial institution being disallowed. Received from Massachusetts K-1
filers to the legislature. Schedules
If, by operation of MGL ch 63, § 32C or another
What if the Taxpayer Is a Fiscal or Short provision of law, a credit normally identified by Section 3 is for reporting credits the taxpayer re-
Year Filer? tax period end date is eligible for indefinite carry- ceived on a Massachusetts K-1 schedule (SK-1,
File the 2020 return for calendar year 2020 and over, the credit should be reported as “non-expir- 2K-1 or 3K-1) that the taxpayer is using (i) to off-
fiscal years that began in 2020 and ended in 2021. ing” and identification of the tax period of origin set or reduce the taxpayer’s total tax due (ii) to
For a fiscal year return, fill in the tax year space at is not necessary. pass to any partner, shareholder or beneficiary of
the top of page 1. Short year filers should file using the taxpayer or (iii) to share with taxpayer affili-
the tax form for the calendar year within which the Overview of Schedule CMS ates. The Brownfields Credit, Film Incentive
short year falls. If the short year spans more than The following is a brief overview of the Schedule Credit, or Medical Device Credit should never be
one calendar year, the filer should file using the CMS sections and where certain credits should included in Section 3.
tax form for the calendar year in which the short be reported. If a taxpayer is using a credit to re- Note: Do not report the Brownfields Credit, Film
year began. If the current form is not available at duce a taxpayer’s current year tax liability, Incentive Credit, and Medical Device Credit in this
the time the short year filer must file, the filer whether it is a non-refundable credit or a refund- section because these credits are issued new cer-
should follow the rules explained in TIR 11-12. able credit, the credit should be reported in Sec- tificate numbers from the DOR when they are re-
tion 1 or 3 of the Schedule CMS. Only a ceived from a pass-through entity or a credit
Schedule CMS: Tax Credits refundable credit that the taxpayer is seeking a re- transfer. These credits should always be reported
Financial institutions, insurance companies, busi- fund for should be reported in either Section 2 or in Section 1, unless the taxpayer is requesting a
ness corporations, and other taxpayers subject to 4 of the Schedule CMS. Generally, a credit should refund of the Film Incentive Credit.
tax under MGL ch 63 may be eligible for certain only be reported in one section on the Schedule
tax credits in Massachusetts. Credits may be CMS unless a portion of it is being used to offset Section 4. Refundable Credits Received
used to offset a tax due, may be passed or shared a tax and a portion is being refunded. from Massachusetts K-1 Schedules
with another person or entity, or, in some cases Section 4 is for reporting credits the taxpayer re-
credits may be fully or partially refundable. MGL Section 1. Non-Refundable Credits
ceived on a Massachusetts K-1 schedule (SK-1,
ch 63 taxpayers with credits available for use in Section 1 is for reporting credits the taxpayer is
2K-1 or 3K-1) and that the taxpayer is using to
the current taxable year must file a Schedule CMS using (i) to offset or reduce the taxpayer’s total
request a refund. The Film Incentive Credit should
to claim most credits. tax due (ii) to pass to any partner, shareholder or
never be included in Section 4. For each refund-
beneficiary of the taxpayer or (iii) to share with
able credit, report the amount of the credit avail-
For each credit claimed on a Schedule CMS, re- taxpayer affiliates. The Brownfields Credit, Film
able after taking into consideration any amount of
port the amount of the credit available for use and Incentive Credit, or Medical Device Credit should
the credits that may have been used to offset a
the amount of credit claimed to reduce tax for the always be included in Section 1, unless the tax-
tax or shared as reported in Section 3 of this
current taxable year. For pass-through entities, re- payer is requesting a refund of the Film Incentive
schedule. Enter the amount by which the available
port the amount of credit distributed to Credit. However, a taxpayer that received a credit
credit balance is being reduced and the amount
partners/shareholders/beneficiaries in the credit on a Massachusetts K-1 schedule from a pass-
to be treated as a refundable credit, which may
shared column. Taxpayers also report the amount through entity or a credit transfer should report
be either 90% or 100% of the reduction. See TIR
of a refundable credit they are using to request a such credit in Section 3 or 4, as applicable.
refund of tax. See the 2020 Credit Manager 13-6, Example 3, for an illustration.
Schedule Instructions for more information on Note: Do not report the refundable Film Incentive
Credit in this section because these credits are is-

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sued new certificate numbers from the DOR Certain Massachusetts tax credits are subject to the apprentice remains employed as an appren-
when they are received from a pass-through en- recapture as specified in the statute authorizing tice during the subsequent taxable year.
tity or a credit transfer. If the taxpayer is request- the credit (e.g. the investment tax credit is subject The ATC is not transferrable but is refundable.
ing a refund of the Film Incentive Credit, it should to recapture under MGL ch 63, § 31A(e) if an asset The ATC is available for tax years beginning on or
be reported in Section 2. for which the credit was taken is disposed of be- after January 1, 2019. See TIR 18-13 for further
fore the end of its useful life). Recapture may also information.
List of Credit Names and Credit Codes be triggered if the corporation no longer qualifies
The following table identifies various credits that for the credit (as when a manufacturing corpora- To claim the ATC, enter the ATC certificate num-
may be available to a taxpayer subject to tax tion ceases to qualify as such or a corporation’s ber and the amount of ATC using credit code AP-
under MGL ch 63 and that must be claimed on a status as a Life Sciences Company is terminated PCRD on Schedule CMS.
Schedule CMS. as discussed in TIR 13-6.) Brownfields Tax Credit
Apprenticeship Tax Credit………..APPCRD* If a recapture calculation is required, the amount Taxpayers subject to tax under MGL ch 63 and
Brownfields . . . . . . . . . . . . . . . . . . BRWFLD of the credit allowed is redetermined and the re- nonprofit organizations may be eligible to claim a
Certified Housing . . . . . . . . . . . . . . CRTHOU duction in the amount of credit allowable is re- Brownfields Tax Credit (BTC) for amounts ex-
captured to the extent the credit was taken or pended to clean up contaminated property in
Community Investment . . . . . . . . . CMMINV* used in a prior year. See DD 89-7. Taxpayers who Massachusetts in an amount equal to either 25%
Conservation Land . . . . . . . . . . . . . CNSLND* have a recapture calculation must complete this or 50% of the cost. The cleanup must begin on
Dairy Farm . . . . . . . . . . . . . . . . . . . DAIFRM* schedule whether or not a recapture tax is deter- or before August 5, 2023, and costs must be in-
mined to be due. curred before January 1, 2024, and equal or ex-
EDIP . . . . . . . . . . . . . . . . . . . . . . . . EDIPCR* ceed 15% of the assessed value of the property
For credits tracked by certificate numbers, enter
EDIP-Vacant Storefront Credit…....VACSTR* each certificate number and the associated cred- before the beginning of the cleanup. Contami-
Employer Wellness. . . . . . . . . . . . . EMPWLL its separately. For credits not tracked by certificate nated properties must be owned or leased for
number, enter credits separately by type and the business purposes, reported to the Massachu-
EOAC . . . . . . . . . . . . . . . . . . . . . . . EOACCR setts Department of Environmental Protection
year to which they relate. List only those credits
Film Incentive . . . . . . . . . . . . . . . . . FLMCRD* and certificate numbers or tax years for which a (DEP), cleaned up in compliance with DEP’s stan-
Harbor Maintenance. . . . . . . . . . . . HRBMNT reduction in the credit is being calculated. dards, and located in an economically distressed
area identified by DEP. Unused portions of BTC
Historic Rehabilitation . . . . . . . . . . HISRHB For more information and examples, see the may be carried forward for the next 5 years. If a
Credit Recapture Schedule instructions.
Investment Tax . . . . . . . . . . . . . . . . INVTAX BTC recipient does not maintain the property in
Life Science (FDA) . . . . . . . . . . . . . LFSFDA* Brief Summary of Available Credits on compliance with standards set out by DEP, the
Schedule CMS credit may be recaptured. The BTC is not refund-
Life Science (ITC). . . . . . . . . . . . . . LFSITC* The following are brief summaries describing the able. For taxpayers subject to a minimum excise
Life Science (Jobs). . . . . . . . . . . . . LFSJOB* specific credits that may be available to a taxpayer under MGL ch 63, the BTC cannot reduce the ex-
Life Science (RD) . . . . . . . . . . . . . . LFSRDC subject to tax under MGL ch 63 and that must be cise due below the minimum amount. The BTC is
claimed on a Schedule CMS. also subject to the 50% limitation for taxpayers
Low-Income Housing. . . . . . . . . . . LOWINC subject to tax under MGL ch 63, § 39.
Apprenticeship Tax Credit The BTC may be transferred, sold or assigned to
Low-Income Housing Donation . . . LIHDON Businesses corporations subject to tax under another taxpayer with a liability under MGL ch 62
Medical Device . . . . . . . . . . . . . . . . MEDDVC MGL ch 63 that employ qualified apprentices may or 63, or to a nonprofit organization. A taxpayer
Research. . . . . . . . . . . . . . . . . . . . . REARCH* be eligible for an Apprenticeship Tax Credit (ATC). must complete a Form BCA, Brownfields Credit
The credit is equal to the lesser of $4,800 or 50% Application, and submit it to DOR. If approved,
Vanpool . . . . . . . . . . . . . . . . . . . . . VANPOL of the wages paid by the business to each quali- DOR will issue a certificate reflecting the amount
Veteran’s Hire . . . . . . . . . . . . . . . . . VETHIR fied apprentice it hires. Business corporations are of the BTC awarded. The party receiving the BTC
*These credits may be partially or fully refund- eligible for up to $100,000 in credits each calen- must include the certificate number with each tax
able. See Schedule CMS instructions for further dar year. To claim the credit, the primary place of return in which the credits are being applied. BTC
information. employment of the apprentice must be in Mass- application forms, including Form BCA, and addi-
achusetts, the business corporation employing tional information are available at mass.gov/dor.
Note: Certified life sciences companies with a Re- the apprentice must register with the Division of
search Credit exceeding the amount of credit that Apprentice Standards as an apprenticeship pro- To claim the BTC, enter the BTC certificate num-
may be claimed under MGL ch 63, § 38M for a gram sponsor and enter into apprenticeship ber and the amount of BTC using credit code BR-
taxable year may, to the extent authorized under agreements with each apprentice for whom the WFLD on Schedule CMS.
the Life Sciences Tax Incentive Program, elect to credit is claimed, and the apprentice must be em- Certified Housing Development Tax Credit
make 90% of the balance of remaining credits re- ployed for at least 180 calendar days in the tax- Taxpayers subject to tax under MGL ch 63 that
fundable. See MGL ch 63, § 38M(j). able year in which the credit is claimed. A invest in housing development projects in Mass-
business corporation claiming the credit in a tax- achusetts may be eligible to claim the Certified
Credit Recapture Schedule able year may also be eligible for a credit in the Housing Development Credit (CHDC) in an
The Credit Recapture Schedule (CRS), which subsequent taxable year, provided that the Divi- amount up to 25% of the costs of qualified pro-
eliminates Schedule RF, lists each credit for which sion of Apprentice Standards again certifies that ject expenditures as defined in MGL ch 40V, § 1.
a recapture calculation must be made.
Eligibility for and the amount of CHDC awarded

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are determined and administered by the Depart- dards. The dairy farmer must have a certificate of (EDIPC) is available to taxpayers subject to tax
ment of Housing and Community Development registration as a Massachusetts dairy farm from under MGL ch 63 with respect to certified pro-
(DHCD). The CHDC is not refundable, but unused the Massachusetts Department of Agricultural jects as defined under MGL ch 23A. The EDIPC is
amounts may be transferred or carried forward Resources (MDAR). The total amount of DFTC equal to a percentage of the cost of qualifying
for 10 years. See TIRs 16-15, 10-15, and 10-14 granted through the program cannot exceed property purchased by a certified project for busi-
for further information. $6,000,000 in any year. The DFTC is refundable ness use within Massachusetts. As part of the
To claim the CHDC, enter the CHDC certificate but is not transferrable. project certification, the EACC may (but is not re-
number and the amount of CHDC using credit To claim the DFTC, enter the MDAR-issued cer- quired to) award a credit under the program and
code CRTHOU on Schedule CMS. tificate number and the amount of DFTC from the determine the percentage of the cost of the prop-
MDAR’s Dairy Farmer Certified Tax Credit State- erty to be used to determine the credit. In addi-
Community Investment Tax Credit ment using credit code DAIFRM on Schedule tion, the EACC may award an EDIPC that is
Taxpayers subject to tax under MGL ch 63 may CMS. refundable. To qualify for the EDIPC, the qualify-
be able to claim a Community Investment Tax ing property must be used exclusively in the cer-
Credit (CITC) for cash contributions made to a Economic Opportunity Area/Economic tified project in Massachusetts and must meet the
community partner to support implementation of Development Incentive Program Credits same tests imposed for the 3% ITC.
its community investment plan, or to a commu- Economic Opportunity Area Credit Unless the EDIPC awarded is refundable, the
nity partnership fund. The CITC is equal to 50% Taxpayers subject to tax under MGL ch 63 that credit may not offset more than 50% of the tax
of the total contribution made by the taxpayer and participated in projects certified by the Economic due. Carryover of unused EDIPC is available only
cannot be claimed for contributions of less than Assistance Coordinating Council (EACC) before to the extent authorized by the EACC. The EACC
$1,000. The Department of Housing and Commu- January 1, 2010 and in effect through December may, in consultation with DOR, limit (but not ex-
nity Development (DHCD) is responsible for de- pand) the EDIPC to a specific dollar amount or
termining which contributions qualify for the CITC 31, 2016, may be eligible to claim an Economic
and the actual amount of the CITC awarded. The Opportunity Area Credit (EOAC) equal to 5% of time duration or in any other manner deemed ap-
CITC is not transferrable. However, the CITC is re- the cost of qualifying property purchased for propriate by the EACC. St. 2009, c. 166, § 18. For
fundable, or, alternatively, may be carried forward business use within a certified project within an example, the EACC may limit the EDIPC available
for 5 years. For further information, see 760 CMR Economic Opportunity Area (EOA). A certified with respect to a particular project to a specific
68.00, 830 CMR 62.6M.1, and TIRs 16-15, 13- project is a project approved by the EACC. To dollar maximum, even if the actual dollar amount
15, and 12-10. qualify for the EOAC, the property must be used of the qualifying purchases would otherwise gen-
exclusively by the certified project in an EOA and erate a higher credit amount. Similarly, the EACC
To claim the CITC, enter the CITC certificate num- must meet the same tests imposed for the 3% may limit the otherwise applicable credit carry
ber and the amount of CITC using credit code Investment Tax Credit (ITC) (see ITC summary forward period provided by MGL ch 63, § 38N(d).
CMMINV on Schedule CMS. below). The EOAC cannot offset more than 50% The EDIPC may be subject to recapture if a tax-
Conservation Land Tax Credit of the tax due. Any unused EOAC may be carried payer’s business is decertified by the EACC, or a
Taxpayers subject to tax under MGL ch 63 that forward for 10 years, while credits not used be- taxpayer stops using the qualifying property in a
make qualified donations of certified land to a cause of the 50% limitation may be carried over certified project before the end of the property’s
public or private conservation agency in Mass- indefinitely. The EOAC may be subject to recap- useful life. The EDIPC is not transferable. For tax-
achusetts may be eligible for a Conservation Land ture if a taxpayer’s business is decertified by the payers subject to a minimum excise under MGL
Tax Credit (CLTC). The Executive Office of Energy EACC, or a taxpayer stops using the qualifying ch 63, the EDIPC may not reduce the excise due
and Environmental Affairs (EEA) ultimately deter- property in a certified project before the end of below the minimum amount. See TIRs 16-15, 14-
mines which donations qualify for CLTC and the the property’s useful life. The EOAC is neither re- 13, 10-15, and 10-1 for further information.
actual amount of CLTC attributable to the dona- fundable nor transferrable. For taxpayers subject To claim the EDIPC, complete Schedule EDIP and
tion. The CLTC is equal to 50% of the fair market to a minimum excise under MGL ch 63, the EOAC enter the amount of EDIPC using credit code
value of the donated certified land but may not may not reduce the excise due below the mini- EDIPCR on Schedule CMS. Also, enter the EACC-
exceed $75,000. The CLTC is refundable but is mum amount. The EOAC is not available to certi- issued certificate number on Schedule CMS. In-
not transferable. Taxpayers who claim CLTC may fied projects that were certified by the EACC on clude both the completed Schedule EDIP and
not claim any other credit or deduction in the or after January 1, 2010. See TIRs 16-15 and 10- Schedule CMS with the return.
same tax year for the costs related to the same 01 for further information.
EDIP Credit for Projects Certified on or
donated, certified land. For further information, To claim the EOAC, complete Schedule EOAC and after January 1, 2017
see 301 CMR 14.00, and 830 CMR 62.6.4. enter the amount of EOAC using credit code The EDIPC provisions were significantly changed
To claim the CLTC, enter the CLTC certificate EOACCR on the Schedule CMS. Include both the for projects certified on or after January 1, 2017.
number and the amount of CLTC using credit completed Schedule EOAC and Schedule CMS For projects certified by the EACC on or after Jan-
code CNSLND on Schedule CMS. with the return. uary 1, 2017, the EDIPC for taxpayers subject to
Dairy Farm Tax Credit Economic Development Incentive Program tax under MGL ch 63 is determined by the EACC
Massachusetts dairy farmers taxable under MGL Credit for Projects Certified on or After based on numerous factors set forth in MGL ch
ch 63 may be eligible for a Dairy Farm Tax Credit January 1, 2010 and Before January 1, 23A § 3D. The EACC may award a refundable
(DFTC) based on the amount of milk produced 2017 EDIPC to any certified project. Unless the EDIPC
and sold during the taxable year when the cost of For projects certified by the EACC on or after Jan- awarded is refundable, the EDIPC may not offset
milk drops below a price based on federal stan- uary 1, 2010 and before January 1, 2017, the more than 50% of the excise due. Carryover of
Economic Development Incentive Program Credit unused EDIPC is available only to the extent

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authorized by the EACC. Recapture is required A taxpayer may carry forward any unused portion vessels through a Massachusetts harbor facility.
only if the EACC revokes the certification of a pro- of the EWC for up to 5 taxable years. For tax- The HMTC is neither refundable nor transferrable.
ject. The EDIPC is not transferable. For taxpayers payers subject to a minimum excise under MGL The HMTC may not reduce the corporate excise
subject to a minimum excise under MGL ch 63, ch 63, the EWC may not reduce the excise due due below the minimum amount but is not sub-
the EDIPC may not reduce the excise due below below the minimum amount. ject to the 50% limitation imposed by MGL ch 63,
the minimum amount. See TIRs 16-15 and 10-01 Since the EWC program expired on December 31, § 32C. Any unused portion of the HMTC may be
for further information. 2017, a taxpayer may only claim a previously carried forward for the next 5 tax years. See TIR
To claim the EDIPC, complete Schedule EDIP and awarded EWC that was carried over to subse- 97-4 and Schedule HM instructions for further in-
enter the amount of EDIPC using credit code quent tax years. Information about the criteria formation.
EDIPCR on Schedule CMS. Also, enter the EACC- DPH utilized for authorizing and certifying the To claim the HMTC, complete Schedule HM and
issued certificate number on Schedule CMS. In- EWC may be found in DPH’s “Massachusetts enter the amount of HMTC using credit code
clude both the completed Schedule EDIP and Wellness Tax Credit Incentive” regulation, 105 HRBMNT on Schedule CMS. Include both the
Schedule CMS with the return. CMR 216.000. completed Schedule HM and Schedule CMS with
EDIP Credit for Vacant Storefronts To claim the EWC, enter the amount of EWC the return.
Effective January 1, 2019, awards of EDIPC are using credit code EMPWLL on Schedule CMS. Historical Rehabilitation Credit
also available as a Vacant Storefront Credit (VSC) Also, enter the DPH issued certificate number on Taxpayers subject to tax under MGL ch 63 that
to taxpayers subject to tax under MGL ch 63 that Schedule CMS. have made qualified expenditures in the rehabili-
occupy vacant storefronts in downtown areas Film Incentive Credit tation of a qualified historic structure may be eli-
that have been designated as Certified Vacant Motion picture production companies subject to gible to claim a Historic Rehabilitation Tax Credit
Storefront Districts. To claim the VSC a taxpayer tax under MGL ch 63 may be eligible to claim the (HRTC). The HRTC may be claimed for up to 20%
must apply for and obtain certification from the Film Incentive Credit (FIC) for certain payroll and of the taxpayer’s rehabilitation expenditures made
EACC and must commit to occupy the vacant production expenses. Production companies that in substantially rehabilitating a historic structure
storefront for not less than 1 year. The taxpayer incur at least $50,000 of production costs in that has received final certification from the
does not need to invest in improvements or cre- Massachusetts are eligible for a credit equal to Massachusetts Historical Commission and placed
ate new jobs to claim the VSC. The EACC awards 25% of the total Massachusetts payroll for the into service (where occupancy of the entire struc-
the VSC on a competitive basis, taking into ac- production, excluding salaries of $1 million and ture or some identifiable portion of it is permit-
count the factors set forth in MGL ch 23A,§ 3C. higher. In addition, production companies whose ted). Unused portions of HRTC may be carried
The amount of VSC available to taxpayers occu- Massachusetts production expenses exceed 50% forward for the following 5 tax years. The HRTC
pying vacant storefronts is limited to $500,000 in of the total production cost may receive a credit may be transferred or sold to another taxpayer
a calendar year. equal to 25% of the total Massachusetts produc- but is not refundable. HRTC awards also may be
The VSC is not transferrable but is refundable. For tion expense. The FIC may be applied to reduce a transferred to other qualifying taxpayers that ac-
additional information about the credit, contact taxpayer's liability (including the minimum ex- quire a historic structure, as long as certain crite-
the Massachusetts Office of Business Develop- cise), reduced by any other available credits, after ria are met. Any HRTC claimed by the taxpayer
ment at 617-973-8600. which 90% of any remaining credits may be re- may be subject to recapture if the taxpayer dis-
To claim the VSC, enter the amount of the VSC funded to the taxpayer. Subject to certain condi- poses of its interest in the structure within 5 years
using credit code VACSTR on Schedule CMS. tions, unused FIC may be carried over, refunded, of its placement into service. HRTC awards how-
Also, enter the EACC-issued certificate number on or transferred by the taxpayer for the following 5 ever are not subject to recapture. For taxpayers
Schedule CMS. tax years. FIC transferees may carry forward un- subject to the corporate excise, the HRTC is not
used FIC for the 5 tax years subsequent to the subject to the 50% limitation under MGL ch 63, §
Employer Wellness Credit first tax year the FIC was allowed to the initial FIC 32C but may not reduce the excise below the
The Employer Wellness Credit (EWC) program transferor. The FIC is not refundable to the trans- minimum amount. For further information, see
expired on December 31, 2017 and no new EWC feree. See TIR 07-15 for further information. 830 CMR 63.38R.1 and TIRs 16-15 and 10-11.
amounts are being awarded. However, remaining To claim the FIC, enter the FIC certificate number To claim the HRTC, enter the HRTC certificate
credits awarded for the 2015 through 2017 tax and the amount of FIC using credit code FLMCRD number and the amount of HRTC using credit
years and carried over by a taxpayer may be ap- on Schedule CMS. Supporting documentation code HISRHB on Schedule CMS. Supporting doc-
plied in the 2020 tax year. must be available to DOR upon request. Certifi- umentation must be enclosed with the return or
Effective for tax years beginning on or after Janu- cate application forms and additional information the HRTC may be disallowed. For further infor-
ary 1, 2013, a taxpayer subject to tax under MGL are available at mass.gov/dor. mation on documentation see the Transfer/Sale
ch 63 that employed 200 or fewer workers was HRC: Historic Rehabilitation Credit Certificate
eligible for the EWC for up to 25% of its costs as- Harbor Maintenance Tax Credit Form and Allotment Schedule HRC: Historic Re-
sociated with implementing a “certified wellness Business corporations subject to tax under MGL habilitation Credit Summary Form.
program” for its employees. Prior to the EWC ch 63 that have paid certain federal harbor main-
program’s expiration on December 31, 2017, a tenance taxes under IRC § 4461 may be eligible Investment Credit
taxpayer could claim the EWC by applying to the to claim the Harbor Maintenance Tax Credit Taxpayers subject to tax under MGL ch 63, § 39
Department of Public Health (DPH) to certify its (HMTC). A corporation is eligible for the HMTC may be eligible to claim the Investment Tax Credit
wellness program. The amount of the credit only for federal harbor maintenance taxes paid (ITC). To claim the ITC, a corporation must qualify
available to be claimed could not exceed $10,000 that are attributable to the shipment of break-bulk as a manufacturing or research development cor-
in any tax year and the credit was not refundable. or containerized cargo by sea and ocean-going poration under MGL ch 63, § 42B, or be princi-

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pally engaged in agriculture or commercial fish- To claim the credit, complete a Schedule RLSC the LSRJTC may be subject to recapture. For
ing. Such corporations may earn a credit equal to and enter the amount of the credit using credit more information, see TIRs 13-6, 11-6, and 08-
3% of the cost of “qualifying tangible property” code LFSFDA on the Schedule CMS. 23.
acquired, constructed, reconstructed, or erected To claim the LSRJTC, complete a Schedule RLSC
during the taxable year. “Qualifying tangible prop- Life Sciences Refundable Investment Tax
erty” includes tangible property, buildings, and Credit and enter the amount of LSRJTC using credit
structural components acquired by purchase (as Certified life sciences companies subject to tax code LFSJOB on Schedule CMS.
defined in IRC § 179(d)) that is used and located under MGL ch 63, to the extent authorized by the Life Sciences Research Tax Credit
in Massachusetts on the last day of the taxable Life Sciences Tax Incentive Program, may claim Certified life sciences companies subject to tax
year, and is depreciable under IRC § 167 with a a Life Sciences Refundable Investment Tax Credit under MGL ch 63, to the extent authorized by the
useful life of four years or more. Any unused por- (LSRITC) equal to 10% of the cost of qualifying Life Sciences Tax Incentive Program, may claim
tion of the credit may be carried forward for 3 tax property acquired, constructed, reconstructed, or a Life Sciences Research Tax Credit (LSRTC) for
years after the credit was earned, while credits erected and used exclusively in Massachusetts. If certain expenditures that do not qualify for the
not used because of the 50% limitation may be the LSRITC exceeds the tax due, 90% of the bal- MGL ch 63, § 38M Research Tax Credit (RC). The
carried over indefinitely. The ITC may be recap- ance of the LSRITC may, at the option of the tax- LSRTC generally is calculated in the same man-
tured if the eligible property for which the ITC is payer and to the extent authorized pursuant to the ner as the RC, but may also include expenditures
claimed is disposed of or ceases to be in qualified Life Sciences Tax Incentive Program, be refund- for research related to legally mandated clinical
use prior to the end of its useful life (as deter- able to the taxpayer for the tax year in which the trial activities performed both inside and outside
mined by the property’s depreciation period for qualified property giving rise to the LSRITC is of Massachusetts. Unlike the RC, the LSRTC is
federal tax purposes). The ITC is neither refund- placed in service. If the taxpayer does not opt to not refundable for certified life sciences compa-
able nor transferrable. The ITC may not reduce make the LSRITC refundable, then the LSRITC nies. See the Research Credit summary below.
the corporate excise due below the minimum may be carried forward for up to 10 years. Certi- The LSRTC is not transferrable. However, unused
amount, nor may the amount of the credit exceed fied life sciences companies qualifying for the portions of the LSRTC may be carried forward for
50% of the taxpayer’s liability. Economic Development Incentive Program Credit 15 years. In the event of the revocation of a com-
(EDIPC) may only take the EDIPC to the extent of pany’s certification as a life sciences company or
To claim the ITC, complete Schedule H and enter an additional 2% of the cost of the qualifying other disqualifying events, the LSRTC may be
the amount of ITC using credit code INVTAX on property. In the event a company’s certification as subject to recapture. For certified life sciences
Schedule CMS. Include both the completed a life sciences company is revoked, the recapture companies subject to a minimum excise, the
Schedule H and Schedule CMS with the return. of the LSRITC may be required. The LSRITC is LSRTC cannot reduce the amount of the excise
Life Sciences Refundable FDA User Fees not transferrable. For certified life sciences com- due to less than the minimum amount. For fur-
Tax Credit panies subject to a minimum excise, the LSRITC ther information, see TIRs 13-6 and 08-23.
Certified life sciences companies subject to tax cannot reduce the amount of the excise due to
under MGL ch 63, to the extent authorized by the less than the minimum amount. For further infor- To claim the LSRTC, complete a Schedule RLSC
Life Sciences Tax Incentive Program, may be eli- mation, see TIRs 13-6 and 08-23. and enter the amount of LSRTC using credit code
LFSRDC on Schedule CMS.
gible to claim a Life Sciences Refundable FDA To claim the LSRITC, complete a Schedule RLSC
User Fees Tax Credit. The credit is equal to 100% and enter the amount of LSRITC using credit Low Income Housing Tax Credit
of the user fees paid on or after June 16, 2008, to code LFSITC on Schedule CMS. Taxpayers subject to tax under MGL ch 63 who
the US Food and Drug Administration (FDA) upon invest in a qualified low-income housing project
submission of an application to manufacture a Life Sciences Refundable Jobs Tax Credit located in Massachusetts may be eligible for the
human drug in Massachusetts. The credit may be Certified life sciences companies subject to tax Low Income Housing Tax Credit (LIHTC). The De-
claimed in the tax year in which the application under MGL ch 63, to the extent authorized by the partment of Housing and Community Develop-
for licensure of an establishment to manufacture Life Sciences Tax Incentive Program, may receive ment (DHCD) determines which low-income
the drug is approved by the FDA. To be eligible a Life Sciences Refundable Jobs Tax Credit (LSR- housing projects will qualify for the LIHTC, which
for the credit, more than 50% of the research and JTC) in an amount determined by the Massachu- properties may generate an LIHTC for investors,
development costs for the drug must have been setts Life Sciences Center in consultation with the and ultimately allocates the amount of credit a
incurred in Massachusetts. Certified life sciences DOR. A taxpayer claiming the LSRJTC must com- taxpayer may claim based on a total pool of
companies may use the FDA user fees credit to mit to the creation of a minimum of 50 net new $20,000,000. The LIHTC may be claimed in the
reduce their tax to zero. At the option of the tax- permanent full-time positions in Massachusetts. year that a “qualified Massachusetts project” is
payer and to the extent authorized pursuant to the If the LSRJTC claimed by a taxpayer exceeds the placed in service and for each of the four subse-
Life Sciences Tax Incentive Program, where the tax otherwise due, 90% of the balance of such quent taxable years. The properties must also
credit exceeds the tax due, 90% of the balance of LSRJTC may, at the option of the taxpayer and to meet the requirements established by Massachu-
the excess credit is refundable. A life sciences the extent authorized by the Life Sciences Tax In- setts and federal laws, and be owned by a tax-
company claiming the credit may not also deduct centive Program, be refundable. Excess LSRJTC payer who enters into a regulatory agreement
FDA user fees for which the credit is claimed on amounts cannot be carried forward to subse- with DHCD.
its return. In the event a company’s certification quent taxable years. The LSRJTC is not trans-
as a life sciences company is revoked, the recap- ferrable. The LSRJTC is subject to all of the Any unused LIHTC may be carried forward for the
ture of credit may be required. The credit is not requirements of the Life Sciences Tax Incentive next 5 tax years. Alternatively, unused credits may
transferrable. For further information, see TIRs Program under MGL ch 23I. In the event of the be transferred. If an event or circumstance occurs
13-6 and 08-23. revocation of a company’s certification as a life that results, or would have resulted, in the recap-
sciences company or other disqualifying events, ture of any portion of a federal Low Income Hous-

- 11 -

ing Credit, then the Massachusetts LIHTC may Low-Income Housing Credit Statement Form and Certified life sciences companies that have an RC
also be subject to recapture. The LIHTC is not re- Allotment Schedule LIHC: Low-Income Housing that exceeds the amount of the credit that may be
fundable. Credit Summary Form. For further information re- claimed under MGL ch 63, § 38M for a taxable
For taxpayers subject to a minimum excise under garding this credit, contact DHCD, Division of Pri- year may, to the extent authorized under the Life
MGL ch 63, the LIHTC may not reduce the excise vate Housing, at (617) 727-7824. Sciences Tax Incentive Program, elect to make
90% of the balance of the remaining credits re-
due below the minimum amount. Medical Device Tax Credit fundable. See TIR 08-23, section 5.
To claim the LIHTC, enter the LIHTC certificate Medical Device Companies taxable under MGL ch
number and the amount of LIHTC using credit 63 may be eligible to claim a Medical Device Tax To claim the RC, complete Schedule RC and enter
code LOWINC on Schedule CMS. Supporting Credit (MDTC). The MDTC is equal to 100% of the amount of RC using credit code REARCH on
documentation must be enclosed with the return the user fees actually paid by the medical device Schedule CMS. Include both the completed
or the LIHTC may be disallowed. For further in- company to the United States Food and Drug Ad- Schedule RC and Schedule CMS with the return.
formation on documentation see the Transfer ministration (FDA). To qualify for the MDTC, the Vanpool Credit
LIHC: Low-Income Housing Credit Statement user fees must be paid during the tax year for Business corporations subject to tax under MGL
Form and Allotment Schedule LIHC: Low-Income which the tax is due for pre-market submissions ch 63 may be eligible for a Vanpool Credit (VPC)
Housing Credit Summary Form. For further infor- (e.g., applications, supplements, or 510(k) sub- equal to 30% of the cost incurred during the tax-
mation regarding this credit, contact DHCD, Divi- missions) to market new technologies developed able year for the purchase or lease of company
sion of Private Housing, at (617) 727-7824. or manufactured in Massachusetts. The MDTC shuttle vans used by the corporation in an em-
may not be carried forward to subsequent tax ployer-sponsored ride sharing program in Mass-
Low Income Housing Donation Tax Credit years. The MDTC is not refundable. However, un- achusetts. The company shuttle vans must be
Taxpayers subject to tax under MGL ch 63 that used portions of the MDTC may be transferred to situated in Massachusetts on the last day of the
make a “qualified donation” of real or personal a purchasing company, who may carry over the corporation's taxable year and used to bring em-
property to certain non-profit entities for use in MDTC but must use it within 5 years of the is- ployees from their homes to their jobs or stu-
purchasing, constructing or rehabilitating a “qual- suance of the certificate. The purchasing com- dents from a public transportation facility to a
ified Massachusetts project” may be eligible to pany may not transfer the MDTC. The MDTC may school campus in Massachusetts. The amount of
claim a Low Income Housing Donation Tax Credit not reduce the purchasing company’s corporate VPC will be prorated for property disposed of or
(LIHDTC). This credit operates in a similar man- excise due below the minimum excise. no longer having a qualified use prior to the end
ner to the Low Income Housing Tax Credit
(LIHTC), but the LIHDTC is limited to 50% of the To claim the MDTC, enter the MDTC certificate of the tax year. Additionally, the VPC will be re-
amount of the “qualified donation,” which may be number and the amount of MDTC using credit captured if the property on which the VPC has
increased to 65% by the Department of Housing code MEDDVC on Schedule CMS. Certificate ap- been taken is disposed of or the property ceases
and Community Development (DHCD). In addi- plication forms and additional information are to be in qualified use prior to the end of its useful
tion, the LIHDTC may only be claimed in the year available at mass.gov/dor. life. No recapture is necessary if the property has
been in qualified use for more than 4 consecutive
that the “qualified donation” is made. However, Research Credit years. The VPC is neither refundable nor trans-
any unused LIHDTC may be carried forward for Business corporations subject to an excise under ferrable. For corporations subject to the corporate
the next 5 years. DHCD determines eligibility and MGL ch 63 that incur “qualified research ex- excise, the VPC may not reduce the corporate ex-
ultimately allocates the LIHDTC a taxpayer may penses” and “basic research payments” may be cise due below the minimum amount, nor may
claim based on a total pool of $20,000,000 able to claim a Research Tax Credit (RC). The RC the amount of VPC allowable in any one tax year
shared with the LIHTC. Only one-fifth of awarded closely parallels the federal research credit. Gen- exceed 50% of the corporation’s corporate excise
LIHDTC will count towards this pool. The LIHDTC erally, “qualified research expenses” include liability.
is not refundable but is transferrable in the same wages paid to employees, a portion of wages paid
manner as the LIHTC. to contractors, and amounts paid for supplies, To claim the VPC, complete Schedule VP and
The property must also meet the requirements but only if the services were performed for re- enter the amount of VPC using credit code VAN-
established by Massachusetts and federal laws search purposes or the supplies were used to POL on Schedule CMS. Include both the com-
and be owned by an owner who enters into a reg- conduct research in Massachusetts. The RC pleted Schedule VP and Schedule CMS with the
ulatory agreement with DHCD. If an event or cir- amount is limited to the first $25,000 of excise return.
cumstance occurs that results, or would have due, plus 75% of any excise due in excess of Veteran’s Hire Tax Credit
resulted, in the recapture of any portion of a fed- $25,000. The RC is neither refundable nor trans- Businesses subject to tax under MGL ch 63 that
eral Low Income Housing Credit, then the Mass- ferrable. Business corporations subject to a mini- hire veterans who live and work in Massachusetts
achusetts LIHDTC may also be subject to mum excise under MGL ch 63 cannot use the RC may be eligible for a Veteran’s Hire Tax Credit
recapture. For taxpayers subject to a minimum to reduce their tax due to below the minimum (VHTC). The credit is equal to $2,000 for each
excise under MGL ch 63, the LIHDTC may not re- amount. However, credits in excess of the tax- qualified veteran hired. The business must em-
duce the excise due below the minimum amount. payer’s liability may be carried over for 15 years, ploy fewer than 100 employees; be certified by
while credits not used because of the 75% rule
To claim the LIHDTC, enter the LIHDTC certificate the Commissioner of Veteran’s Services; and
may be carried over indefinitely. The deduction al-
number and the amount of LIHDTC using credit qualify for and claim the federal Work Opportunity
lowed to a corporation for any research expenses
code LIHDON on Schedule CMS. Supporting doc- Credit allowed under IRC § 51. A business may
generating an RC must be reduced by the amount
umentation must be enclosed with the return or be eligible for a second VHTC for the next taxable
of RC generated. This amount is added back to
the LIHDTC may be disallowed. For further infor- year if the veteran continues to work for the busi-
income on Schedule E, line 13.
mation on documentation see the Transfer LIHC: ness. In order to claim the VHTC, the primary

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place of employment and the primary residence Enclose a supporting schedule for each entity
of the qualified veteran must be in Massachu- clearly stating all items of total receipts and inter-
setts, and the business corporation must obtain company transactions.
certification that the veteran is a qualified veteran, Line 24. Enter the amount of ordinary income or
as defined in IRC § 51(d)(3), from the Depart- loss from U.S. 1120S, line 21. Do not include in-
ment of Career Services, no later than the em- terest, dividends, and other portfolio income in-
ployee’s first day of work. cluded in line 21. Enter such income on lines 39
The VHTC is neither refundable nor transferrable. through 44.
Any amount of VHTC that exceeds the tax due in Line 25. If reporting other income or loss from
the current taxable year may be carried forward U.S. Form 1120S, Schedule K, line 10, enclose a
to any of the 3 subsequent taxable years. The statement and explain.
VHTC is available for qualified veterans hired after
July 1, 2017. A business subject to a minimum Line 26. Enter total foreign, state or local income,
excise under MGL ch 63 cannot use the credit to franchise, excise or capital stock taxes deducted
reduce its tax due to below the minimum amount. from U.S. income. These taxes are deductible for
See TIR 17-10 for further information. U.S. tax purposes, but are not deductible in
Massachusetts.
To claim the VHTC, enter the VHTC certificate
number and the amount of VHTC using credit Line 28. Enter in line 28 any income or loss in-
code VETHIR on Schedule CMS. cluded in lines 24 and/or 25 which is granted
treatment by the U.S. government or is classified
Instructions for Financial Institution as a capital gain or loss for Massachusetts pur-
S Corporations poses. For Massachusetts purposes capital gain
or loss is the gain or loss from the sale or ex-
Schedule S change of a capital asset.
Distributive income. In the following Schedule S A capital asset is:
and SK-1 instructions only certain items are ad-
dressed in detail. Lines without specific instruc-
tions are considered to be self-explanatory.
Line 1. Enter the total amount of gross receipts
or sales from U.S. Form 1120S, line 1c. Returns
and allowances are subtracted in reaching this
amount.
Line 11. Enter the total amount of other income
not included in lines 1 through 10. Include income
from U.S. Form 1120S, line 5, and U.S. Form
1120S, Schedule K, lines 10. If an S corporation
is a partner in a partnership, include the amount
of its distributive share of the partnership’s total
receipts not included in lines 1 through 10. In-
clude all tax exempt income. Also enter any other
items included in an entity’s gross income under
IRC § 61 and not included in lines 1 through 10.
Also include in line 11 any difference that results
from the annualization of income for a short pe-
riod return.
Line 13. Enter only those receipts from intercom-
pany transactions that are included in lines 1
through 11. Do not include receipts from related
entities included in 15 below.
Line 15. Enter here the aggregated total receipts
less receipts from intercompany transactions for
all entities other than the S corporation that share
common ownership and are engaged in a unitary
business with the S corporation according to 830
CMR 62.17A.1 (11)(e) and (f).

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For Massachusetts purposes a capital gain or
loss is the gain or loss from the sale or exchange
of a capital asset. A capital asset is:

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Where the credit is available, the S corporation banks from Schedule S, line 40. For a nonresident income is not taxed by the U.S. government, but
must also provide each resident shareholder with eligible to apportion, enter the shareholder’s share is taxable in Massachusetts.
separately stated totals of 5.0% interest (other than of the S corporation’s 5.0% interest from Mass- Each shareholder should include the line 9 total
from Massachusetts banks), dividends and certain achusetts banks multiplied by the apportionment in Form 1, Form 1-NR/PY, or Form 2, Schedule B,
capital gains taxed at 12% income and long-term percentage in Form 63-FI, Schedule E, line 5. line 3.
capital gain taxed by other jurisdictions to enable Each shareholder should include the line 8 total Line 11. Enter the shareholder’s share of the S
each shareholder to calculate the amount of the in Form 1, line 5, or Form 1-NR/PY, line 7; or Form corporation’s royalty income from Schedule S, line
credit. The S corporation should provide each 2. 43. For a nonresident shareholder eligible to ap-
shareholder with the names of each applicable ju-
risdiction and the amount taxed. Each nonresident shareholder whose income is portion, enter the shareholder’s distributive share
apportioned should also receive from the S cor- of the S corporation royalty income from Sched-
Enter the shareholder’s proportionate share of the poration the amount of the shareholder’s pre- ule S, line 43, multiplied by the apportionment
Lead Paint Credit, Economic Opportunity Area apportionment share of 5.0% interest from Mass- percentage in Form 63-FI, Schedule E, line 5.
Credit, Full Employment Credit, Brownfields Credit, achusetts banks. The correct Massachusetts amount of the share-
Low-Income Housing Credit, Historic Rehabilita-
tion Credit, Home Energy Efficiency Credit, Solar Each nonresident individual whose income is ap- holder’s share of royalty income may differ from
Heat Credit, Film Incentive Credit, Medical Device portioned should include this amount in Form the comparable U.S. total reported on the share-
Credit or other applicable credit. Supporting doc- 1-NR/PY, Schedule B. This amount should be holder’s Form 1 or Form 1-NR/PY, Schedule E-1,
umentation must be made available upon request. used instead of any amount from Form 1-NR/PY, line 1; or Form 2, Schedule E, line 1.
line 7 because the shareholder’s full distributive Each shareholder should make adjustments to re-
Line 5. Enter the shareholder’s share of the S cor- share of such income is included in the U.S. flect the correct Massachusetts amount in Form
poration’s net rental income or loss from real es- amount reported in Form 1-NR/PY, Schedule B, 1 or Form 1-NR/PY, Schedule E-1, line 2; or Form
tate activities from Schedule S, line 34. The line 1. Each nonresident trust or estate whose in- 2, Schedule E.
correct Massachusetts amount of the share- come is apportioned should also receive from the
holder’s net income or loss from rental real estate S corporation the amount of shareholders pre- Each shareholder should enclose a statement to
activities may differ from the comparable U.S. apportionment share of 5.0% interest from Mass- the shareholder’s Massachusetts tax return and
total reported on the shareholder’s Form 1 or achusetts banks and should include its pre-ap- explain any adjustments.
Form 1-NR/PY, Schedule E-2; or Form 2, Sched- portionment share of 5.0% interest from Line 12. Enter the shareholder’s share of the S
ule E. Each shareholder should make adjustments Massachusetts banks in Form 2, Schedule B, in- corporation’s income from Schedule S, line 44.
in Form 1 or Form 1-NR/PY, Schedule E-2; or stead of any amount from Form 2, line 5. For a nonresident shareholder eligible to appor-
Form 2, Schedule E, to reflect the correct Mass- tion, enter the shareholder’s distributive share of
achusetts amount. Each shareholder should en- Line 9. Enter the shareholder’s share of the S cor-
close a statement with the shareholder’s poration’s interest (other than from Massachu- the S corporation’s other income from Schedule
Massachusetts tax return and explain. setts banks) and dividend income from Schedule S, line 44 multiplied by the apportionment per-
S, line 41. For a nonresident shareholder eligible centage in Form 63-FI, Schedule E, line 5.
Line 6. Enter the shareholder’s share of the S cor- to apportion, enter the shareholder’s distributive The correct Massachusetts amount of the share-
poration’s net rental income or loss from other share of the (other than from Massachusetts holder’s share of other income may differ from
activities from Schedule S, line 37. banks) interest and dividend income from Sched- the comparable U.S. total reported on the share-
The correct Massachusetts amount of the share- ule S, line 41, multiplied by the apportionment holder’s Form 1, Form 1-NR/PY, or Form 2. Each
holder’s share of net rental income or loss from percentage in Form 63-FI, Schedule E, line 5. shareholder should make adjustments on the ap-
other activities may differ from the comparable The correct Massachusetts amount of the share- plicable lines of Form 1, Form 1-NR/PY, or Form
U.S. total reported on the shareholder’s Form 1 holder’s share of (other than from Massachusetts 2 to reflect the correct Massachusetts amount. If
or Form 1-NR/PY, Schedule E-2; or Form 2. Each banks) interest and dividend income may differ any income reported to the S corporation from a
shareholder should make adjustments in Form 1 from the comparable U.S. total reported on the Real Estate Mortgage Investment Conduit
or Form 1-NR/PY, Schedule E-2; or Form 2, to re- shareholder’s Form 1, Form 1-NR/PY, or Form 2, (REMIC) in which the S corporation is a residual
flect the correct Massachusetts amount. Each Schedule B, lines 1 and 2. interest holder is reported in line 12, then any
shareholder should enclose a statement with the such adjustment should be made on Form 1 or
shareholder’s Massachusetts tax return and ex- Each shareholder should make adjustments to re- Form 1-NR/PY, Schedule E-1, line 2 or Form 2,
plain. flect the correct Massachusetts amount in Form Schedule E.
1 and Form 1-NR/PY, Schedule B, line 6; or Form
Line 7. Enter the shareholder’s share of the S cor- 2, Schedule B. Each shareholder should enclose Each shareholder should attach a statement to the
poration’s interest on U.S. debt obligations from a statement to the shareholder’s Massachusetts shareholder’s Massachusetts tax return and ex-
Schedule S, line 39. For a nonresident shareholder tax return and explain any adjustments. plain any adjustments.
eligible to apportion, enter the shareholder’s Line 13. Enter the shareholder’s share of the S
share without apportionment. This income is tax- Line 10. Enter the shareholder’s share of the S
able by the U.S. government, but tax-exempt in corporation’s non-Massachusetts state and mu- corporation’s short-term capital gain from Sched-
Massachusetts. Each shareholder should include nicipal bond interest from Schedule S, line 42. For ule S, line 45.
the line 7 total in Form 1 or Form 1-NR/PY, Sched- a nonresident shareholder eligible to apportion, For a nonresident shareholder eligible to apportion,
ule B; or Form 2, Schedule B. enter the shareholder’s distributive share of the S enter the shareholder’s share of the S corporation’s
corporation’s non-Massachusetts and municipal short-term capital gain or loss multiplied by the
Line 8. Enter the shareholder’s share of the S cor- bond interest multiplied by the apportionment apportionment percentage in Form 63-FI, Sched-
poration’s 5.0% interest from Massachusetts percentage in Form 63-FI, Schedule E, line 5. This ule E, line 5.

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The correct Massachusetts amount of the share- business and held for one year or less from Sched- ment percentage in Form 63-FI, Schedule E, line
holder’s share of short-term capital gain may differ ule S, line 48. 5.
from the comparable U.S. total reported on the For a nonresident shareholder eligible to appor- The correct Massachusetts amount of the share-
shareholder’s Form 1 or Form 1-NR/PY, Schedule tion, enter the shareholder’s share of the S cor- holder’s share of other long-term capital gains or
B, line 8; or Form 2, Schedule B. poration’s loss on the sale, exchange, or losses may differ from the comparable U.S. total
Each shareholder should make adjustments in involuntary conversion of property used in trade reported on the shareholder’s Form 1, Form
Form 1, Form 1-NR/PY, Schedule B, line 8 or Form or business and held for one year or less multi- 1-NR/PY, or Form 2, Schedule D. Each share-
2, Schedule B, to reflect the correct Massachu- plied by the apportionment percentage in Form holder should make adjustments in Form 1 or
setts amount. Each shareholder should enclose a 63-FI, Schedule E, line 5. Form 1-NR/PY, Schedule D, lines 6 and/or 9, or
statement with the shareholder’s Massachusetts Each shareholder should make adjustments in Form 2, Schedule D, lines 6 and/or 11.
tax return and explain any adjustments. Form 1 or Form 1-NR/PY, Schedule B, line 15, or Line 20. Enter the shareholder’s share of the S cor-
Line 14. Enter the shareholder’s share of the S cor- Form 2, Schedule B. Each shareholder should en- poration’s long-term gains on collectibles from
poration’s short-term capital losses from Schedule close a statement with the shareholder’s Mass- Schedule S, line 52. For a nonresident shareholder
S, line 46. For a nonresident shareholder eligible achusetts tax return and explain any adjustments. eligible to apportion, enter the shareholder’s share
to apportion, enter the shareholder’s share of the Line 17. Enter the shareholder’s share of the S of the S corporation’s long-term gains on col-
S corporation’s short-term capital losses multi- corporation’s long-term capital gain or loss from lectibles multiplied by the apportionment percent-
plied by the apportionment percentage in Form Schedule S, line 49. For a nonresident share- age in Form 63-FI, Schedule E, line 5.
63-FI, Schedule E, line 5. holder eligible to apportion, enter the shareholder’s The correct Massachusetts amount of the share-
The correct Massachusetts amount of the share- share of the long-term capital gain or loss multi- holder’s share of long-term gains on collectibles
holder’s share of short-term capital losses may plied by the apportionment percentage in Form may differ from the comparable U.S. total reported
differ from the comparable U.S. total reported on 63-FI, Schedule E, line 5. on the shareholder’s Form 1, Form 1-NR/PY or
the shareholder’s Form 1, Form 1-NR/PY or Form The correct Massachusetts amount of the share- Form 2, Schedule D, line 1.
2, Schedule B. Each shareholder should make ad- holder’s share of long-term capital gain or loss Each shareholder should make adjustments in
justments in Form 1 or Form 1-NR/PY, Schedule may differ from the comparable U.S. total reported Form 1 or Form 1-NR/PY, Schedule D, line 9 or
B, line 14; or Form 2, Schedule B. on Form 1, Form 1-NR/PY, or Form 2, Schedule Form 2, Schedule D. Each shareholder should
Each shareholder should enclose a statement with D, line 1. enter the correct Massachusetts amount in Form
the shareholder’s Massachusetts tax return and Each shareholder should make adjustments in 1 or Form 1-NR/PY, Schedule D, line 11 or Form
explain any adjustments. Form 1, Form 1-NR/PY, Schedule D, line 9; or Form 2, Schedule D, line 13. Each shareholder should
Line 15. Enter the shareholder’s share of the S 2, Schedule D, to reflect the correct Massachu- enclose a statement with the shareholder’s Mass-
corporation’s gain on the sale, exchange, or in- setts amount. Each shareholder should enclose a achusetts tax return and explain any adjustments.
voluntary conversion of property used in trade or statement with the shareholder’s Massachusetts Shareholder’s Basis Information
business and held for one year or less from Sched- tax return and explain any adjustments. The information in lines 22 through 26 may be
ule S, line 47. Line 18. Enter the shareholder’s share of the S needed by the shareholder to determine the limi-
For a nonresident shareholder eligible to apportion, corporation’s IRC § 1231 gain or loss from Sched- tation of losses passed through to the share-
enter the shareholder’s share of the S corporation’s ule S, line 50. holder, or the gain or loss from sale or other
disposition of the shareholder’s stock and indebt-
gain on the sale, exchange, or involuntary conver- For a nonresident shareholder eligible to appor-
edness.
sion of property used in trade or business and held tion, enter the shareholder’s share of the S cor-
for one year or less multiplied by the apportion- poration’s IRC § 1231 gain or loss multiplied by Line 23. For a calendar year S corporation, enter
ment percentage in Form 63-FI, Schedule E, line the apportionment percentage in Form 63-FI, in line 23 the number of the shareholder’s shares
5. Schedule E, line 5. and the amount of the shareholder’s federal basis
as of December 31, 1985. If the S corporation was
The correct Massachusetts amount of the share- The correct Massachusetts amount of the share-
a fiscal year entity, enter the number of the share-
holder’s share of gain on the sale, exchange, or holder’s share of IRC § 1231 gain or loss may dif-
holder’s shares and the amount of the share-
involuntary conversion of property used in trade fer from the comparable U.S. total reported on the
holder’s federal basis as of the last day of the
or business and held for one year or less may dif- shareholder’s Form 1, Form 1-NR/PY, or Form 2,
taxable year prior to becoming a Massachusetts
fer from the comparable U.S. total reported on the Schedule D.
shareholder’s Form 1, Form 1-NR/PY; or Form 2, S corporation.
Schedule B. Each shareholder should make adjustments in
If the S corporation became a Massachusetts S
Form 1 or Form 1-NR/PY, Schedule D, line 9; or
corporation after December 31, 1985, enter in line
Each shareholder should make adjustments in Form 2, Schedule D. Each shareholder should en-
23 the number of the shareholder’s shares and
Form 1 or Form 1-NR/PY, Schedule B, line 10; or close a statement with the shareholder’s Mass-
the amount of the shareholder’s federal basis as
Form 2, Schedule B. Each shareholder should en- achusetts tax return and explain any adjustments.
close a statement with the shareholder’s Mass- of the last day of the taxable year prior to becom-
achusetts tax return and explain any adjustments. Line 19. Enter the shareholder’s share of the S cor- ing a Massachusetts S corporation. If reporting a
poration’s other long-term capital gains or losses federal basis other than December 31, 1985,
Line 16. Enter the shareholder’s share of the S from Schedule S, line 51. For a nonresident share- specify the year.
corporation’s loss on the sale, exchange, or in- holder eligible to apportion, enter the shareholder’s
Line 25. Enter the net amount of the adjustments
voluntary conversion of property used in trade or share of the S corporation’s other long-term cap-
made share of S corporation income, decreased by
ital gains and losses multiplied by the apportion-

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distributions to the shareholder, and otherwise ad-
justed to reflect changes that affect the basis of the
stock. Make comparable entries for adjustments
to the shareholder’s Massachusetts indebtedness.
More detailed information on Massachusetts basis
adjustment is provided in 830 CMR 62.17A.1.
Line 26. Enter the net amount of the adjustments
made to the shareholder’s federal basis for the
taxable year.
Make comparable entries for adjustments to the
shareholder’s federal indebtedness.
Declaration Election Code
Under declaration election code, the S corporation
should indicate how the shareholder will be meet-
ing its Massachusetts tax obligation.

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