Bill > H2653

This bill, titled "Reforming economic substance rules," empowers the Commissioner of the Department of Revenue to disregard the tax benefits claimed from certain financial dealings if they lack genuine economic purpose. Specifically, it amends Chapter 62C of the General Laws to allow the commissioner to disallow the tax consequences of a transaction if it's deemed a "sham transaction" or falls under similar tax doctrines. For a transaction to be considered valid under these new rules, the taxpayer must prove, by a preponderance of the evidence (meaning more likely than not), that the deal meaningfully altered their economic situation beyond just state income tax implications and that they had a significant reason for entering into it that was unrelated to state taxes. This provision does not restrict the commissioner's existing authority to make other tax adjustments. The changes proposed by Section 1 of this bill are set to take effect on January 1, 2015.