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Raytheon’s Quest for $8 Million Excise Tax Refund Denied (1)

Sept. 13, 2019, 3:45 PMUpdated: Sept. 13, 2019, 5:55 PM

Raytheon Co.‘s bid for an $8.4 million state excise tax refund was rejected by a Massachusetts appeals court for being too late.

The Appeals Court of Massachusetts ruled Sept. 12 that Raytheon’s abatement application for 2007 and 2012 returns could only reduce the amounts assessed in notices from the commissioner of revenue, not the original taxes the defense giant paid in those returns.

The intermediate state appeals court had decided to hear Raytheon’s 2007 and 2012 tax return cases together. The cases center on whether the Waltham, Mass.-headquartered company can use the date of a tax deficiency assessment to create a new deadline for challenging the size of an original tax bill.

Raytheon declined to comment.

The general rule is that a taxpayer must apply for an abatement within three years of filing, within two years of the tax assessment, or within one year of paying the tax, whichever is later.

Chief Justice Mark V. Green said in the opinion that a tax bill isn’t open to reconsideration after the deadline has passed. An assessment doesn’t open up other potential changes to the original amount due, he said.

“We reject the foundational suggestion in Raytheon’s argument,” Green said.

The 2007 return case focused on whether Raytheon could get a $5.7 million excise tax refund that it only claimed in a 2013 appeal to the Massachusetts Appellate Tax Board, when the company was challenging the $651,000 it was additionally assessed. Raytheon claimed its original return had inflated its sales factor, leading to an overstatement of its income.

The 2012 case centered on whether Raytheon could get a $2.6 million refund based on investment tax credit carryforwards it got after settling its corporate excise tax liability for 2008 and 2009. Massachusetts tax authorities applied nearly $120,000 in carryforwards to eliminate a remaining 2012 deficiency. Raytheon said it should get a refund in the amount of the remaining carryforwards.

In both cases, Raytheon claimed the deficiency assessments from tax officials included not just those assessments but also whatever difference there might be between what it reported on returns and what was actually due.

Raytheon acknowledged the appeals court had rejected a similar claim in 2001, but said the specific arguments it was now raising weren’t pressed in that case.

Green emphasized that an application to reduce owed taxes filed in reference to an assessed deficiency can only initiate a reduction request on the amount stated in the assessment.

Associate Justices Ariane D. Vuono and James Lemire joined Green in the opinion.

The case is Raytheon Co., Mass. App. Ct., No. 18-P-790, 9/12/19.

(Updated with additional details throughout.)

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com