G. L. c. 58 § 20]

Distribution of Tax on Business Corporations

SECTION 20. One sixth of every tax paid by any domestic business or foreign corporation under sections thirty to fifty-one, inclusive, of chapter sixty-three, shall be retained by the commonwealth. The remainder shall be distributed, credited and paid to the town of the commonwealth where the business of the corporation is carried on. If the corporation maintains an office, store or factory in more than one such town, said remainder shall be distributed, credited and paid to such towns in proportion to the value of the tangible property of the corporation in each of them on April first, or on such other day as the commissioner shall determine, which value shall be determined in such manner as he shall deem just; provided, that if the corporation does not conduct its business in Massachusetts and does not own any tangible property in any town of the commonwealth, other than furniture and equipment reasonably necessary for the use of the clerk or other executive officers of the corporation, all said tax shall be retained by the commonwealth.

Under the original corporate franchise tax act it was provided that such proportion of the tax on each corporation subject to the tax as corresponded to the proportion of its stock owned by persons residing in this commonwealth should be distributed to the several cities and towns in which such persons resided, according to the number of shares owned by persons resident in each city or town. This provision formed an important part of the original scheme of the corporate franchise tax, the purpose of which was to give to the towns a share of this tax corresponding to that which under the former system they had received from the tax on the shares of these corporations, or, in other words, to measure the share of each town in the excise tax by the number of shares which under the former system would have been taxable in that town. Such proportion of the tax on each corporation as corresponded to the number of shares owned by persons not residing in this commonwealth was retained by the commonwealth.

In course of time other provisions were adopted for the distribution of the tax on public service companies, but the method

1 St. 1864, c. 208, § 8.

3

2 Worcester v. Board of Appeal, 184 Mass. 460, 466 (1904). 3 G. L. c. 58, § § 22, 23 and 24, infra pages 177, 178.

[G. L. c. 58 § 20 of distribution of the tax on domestic business corporations remained unchanged until 1908. In that year it was provided that one-half of the tax upon domestic business corporations which would under the statutes previously in force have been paid to the towns in which the stockholders dwelt should be credited to the town in which the business of the corporation was carried on. In 1910 the whole of the portion of the tax on each corporation proportionate to the shares held by residents of the commonwealth was made distributable to the towns in which the business of the corporation was carried on. The effect of this change was of course to decrease the proportion of the corporation tax distributed to residential towns and to increase the proportion distributed to manufacturing and commercial towns to a marked degree, but the constitutionality of the statutes which effected the change was not open to question, because it was clearly within the discretion of the legislature to determine whether the situs of the stock of a corporation, for purposes of taxation, should be the domicile of the stockholders or the place where the business of the corporation was carried on."

The share of the commonwealth in the tax on domestic business corporations, representing the proportion of the stock held by non-residents, amounted each year to approximately onesixth of the whole; and after the domicile of the stockholders had ceased to be a measure in the distribution of the tax among the cities and towns, in order to avoid the clerical work necessary to ascertain the domicile of the stockholders now required merely to fix the share of the commonwealth, it was provided that the share of the commonwealth should in each year constitute onesixth of the whole."

In 1919 foreign business corporations doing business in Massachusetts were subjected to a tax similar to that imposed on domestic corporations, and the method of distribution being the same, foreign corporations were included in the foregoing section of the statutes.

4 St. 1908, c. 614.

5 St. 1910, c. 456.

6 Supra, Part I, §§ 44, 45. 7 St. 1919 c. 355, I, § 13.

8 St. 1919, c. 355. II, § 31.

G. L. c. 58 §§ 21,22]

Distribution of Tax on Trust Companies

SECTION 21. Such proportion of the tax paid by each corporation, company or association under sections fifty-three to sixty, inclusive, of chapter sixty-three, except railroad, street railway, electric railroad, telephone, telegraph, gas, electric light, gas and electric light and water companies, as corresponds to the proportion of its stock owned by persons residing in this commonwealth, shall be distributed, credited and paid to the several towns in which, from the returns or other evidence, it appears that such persons resided on April first preceding, according to the number of shares so held in such towns respectively. If stock is held by a fiduciary, the beneficiary shall be regarded as the shareholder for the purpose of distribution under this section, and if a town is a shareholder, the distribution shall be the same as if the stock were owned by a resident thereof.

This statute is the section of the original 1864 statute relating to the distribution of the corporate franchise tax, as amended from year to year; but in course of time other provision has been made for almost every class of corporations and the only corporations now subject to its provisions are trust companies, and possibly a few banks established under the provisions of statute not now in force and a few corporations organized by a special act prior to 1831.

Distribution of Tax on Street Railway Companies

SECTION 22. The tax paid by each electric railroad and street railway company under sections fifty-three to sixty, inclusive, of chapter sixty-three shall be apportioned among the several towns in proportion to the length of tracks operated by such company in said towns respectively. The share of the tax paid by a street railway or an electric railroad company in respect of its tracks upon locations granted by the board having charge of metropolitan parks, of the Wachusett mountain state reservation or of the Greylock reservation shall be apportioned to the commonwealth, and credited by the state treasurer to the sinking fund of the loan to which the expenditure for the road, boulevard, park or reservation in which the tracks are located was charged.

[G. L. c. 58 §§ 23, 24 Prior to 1898 the tax paid by street railway companies was distributed to the towns in which the stockholders dwelt, in the same manner as the tax on business corporations, but in 1898 the present method of distributing the tax in proportion to the mileage of tracks in the respective towns was adopted.1

Distribution of Tax on Railroad, Telephone and
Telegraph Companies

SECTION 23. The corporate franchise tax paid by railroad, telephone and telegraph companies shall be distributed, credited and paid to the towns of the commonwealth or shall be retained by the commonwealth in the manner following: Such part of said tax paid by each of said corporations as is paid on account of shares of its stock owned by non-residents of Massachusetts shall be retained by the commonwealth. The remainder of said tax shall be distributed, credited and paid to the several towns in proportion to the total assessed value of property actually taxed in each town for the preceding year.

The tax on the franchises of railroad, telephone and telegraph companies was originally distributed in the same manner as the tax on other corporations, that is to the towns of the residence of the stockholders, and, in the case of stock owned by persons not residents within the commonwealth, retained by the commonwealth. In 1916 the present method was adopted. It is based on the ground that railroads, telephone and telegraph companies derive their income from people of all parts of the commonwealth, and that the most practical method of distributing the tax with approximate justice is to allow all the cities and towns of the commonwealth to share in its distribution.2

Distribution of Tax on Gas, Electric Light and
Water Companies

SECTION 24.

The corporate franchise tax paid by gas, electric light, gas and electric light and water companies shall be distributed, credited and paid to the towns of the commonwealth or shall be retained

1 St. 1898. c. 578. § 4.

1 St. 1916, c. 299, § 1.

2 See Report of Special Commission on Taxation Appointed under Chapter 134, Resolves of 1915, p. 21.

G. L. c. 58 §§ 24A, 25]

by the commonwealth in the manner following: Such part of said tax paid by each of said corporations as is paid on account of shares of its stock owned by non-residents of Massachusetts shall be retained by the commonwealth. The remainder of such tax shall be distributed, credited and paid to the town of the commonwealth where the business of the corporation is carried on; and if any such corporation carries on its business in more than one such town, this part of the tax paid by it shall be distributed, credited and paid to such towns in proportion to the value of the works, structures, real estate, machinery, poles, underground conduits, wires and pipes of the corporation in each of them on April first, as determined from the returns or in any other manner.

Until 1916 the tax on the stock of gas, electric light and water companies was distributed to the towns in which the stockholders dwelt, the stock of non-residents being credited to the commonwealth, but in 1916 upon the recommendation of a special commission appointed in the preceding year,' the present method was adopted.2

Interest received by the

Distribution of Interest on Overdue Corporation Taxes SECTION 24 A (St. 1921, chap. 375 § 1). commonwealth on overdue taxes from corporations under section seventy of chapter sixty-three, shall be distributed, credited and paid to the several towns in the same manner and proportions as the principal of such taxes is distributed, credited and paid.

Determination of Amounts to be Distributed

SECTION 25 (as amended by St. 1921, chap. 375, § 3). The commissioner, subject to appeal to the board of appeal, shall ascertain and determine the amount due to each town under sections twenty to twenty-four A, inclusive, notify the treasurer of each town thereof and certify the amount, as finally determined, to the state treasurer, who shall thereupon pay the same.

This statute is in substantially the same form as when originally enacted in 1865.1 A decision by the board of appeal, while final and conclusive as between two towns upon the question of 1 Report of Special Commission on Taxation Appointed under Chapter 134, Resolves of 1915, p. 22.

2 St. 1916, c. 299, § 2.

1 St. 1865, c. 283, § 15.