[G. L. c. 58 § 26 the right of either town to a share in the corporation tax, is not binding upon individual stockholders or others who are not parties to the proceedings, upon the question of the domicile of a stockholder, or conversely upon the town in a controversy with a stockholder, even if the domicile of such stockholder was the very question in issue before the board of appeal.2 Returns of Bank Stock held by Fiduciaries and SECTION 26. A guardian who holds, or whose ward holds, shares of stock in any corporation the tax on whose shares is distributed in whole or in part according to the residence of the shareholder, including banks located in the commonwealth liable to taxation, and an executor, administrator, trustee or other person who holds in trust any such stock, shall annually, between April first and tenth, return under oath to the commissioner the names and residences, on the first day of that month, of themselves and of all such wards or other persons to whom any part of the income from such stock is payable, the number of shares of stock so held and the name and location of the corporation. A partnership shall annually, between April first and tenth, make a like return, stating the amount of such stock owned by the firm, the names and residences of all the partners and the proportional interest or ownership of each partner in said stock. If a guardian, executor, administrator, trustee or partnership neglects to make the returns required by this section on or before April tenth of each year, the commissioner shall give notice by mail, postage prepaid, to such fiduciary or partnership of such default. If such fiduciary or partnership omits to file said return within thirty days after such notice of default has been given, he or it shall forfeit to the commonwealth not less than five nor more than ten dollars for each day for fifteen days after the expiration of said thirty days, and not less than ten nor more than two hundred dollars for each day thereafter during which such default continues, or any other sum, not greater than the maximum forfeiture, which the court may deem just and equitable. Such forfeiture may be recovered as provided in chapter sixty-three. 2 Babcock v. Slater, 212 Mass. 434 (1912). G. L. c. 58 §§ 27, 28] This section dates back to the original corporate franchise tax act of 18641 and makes possible what is sometimes known as the "secondary allocation" of the corporate franchise tax; that is stock standing in the name of a fiduciary is credited to the town in which the beneficiary lives rather than to the domicile of the fiduciary. The changes in recent years in the laws relating to the distribution of the corporation tax have made this law inapplicable to all corporations except those engaged in banking. It applies however to the direct tax on national bank stock as well as to the corporate franchise tax on trust companies. 2 Repayment by the State of Illegal Corporation and SECTION 27. If it shall appear that a legacy and succession tax or a tax or excise upon a corporation, foreign or domestic, which has been paid to the commonwealth, was in whole or in part illegally exacted, the commissioner may, with the approval of the attorney general, issue a certificate that the party aggrieved by such exaction is entitled to an abatement, stating the amount thereof. The treasurer shall pay the amount thus certified to have been illegally exacted, with interest, without any appropriation therefor by the general court. No certificate for the abatement of any tax shall be issued under this section unless application therefor is made to the commissioner within the time prescribed by law for beginning legal proceedings to obtain a repayment of the tax. This section shall be in addition to and not in modification of any other remedies. This section was first enacted in 1919 to cure a defect in the tax laws previously existing. Until this statute was enacted the commonwealth had no power to refund an inheritance or corporation tax admittedly illegal without requiring the taxpayer to go through the form of instituting legal proceedings. The case thus instituted could be allowed to go to judgment by agreement and the judgment collected from the state treasury. This statute without depriving the commonwealth of any substantial right avoids unnecessary trouble and expense for the taxpayers. Assessment of Deposits with State Treasurer SECTION 28. The commissioner shall annually assess upon every corporation or organization required by law to make deposits in 1 St. 1864, c. 208, § 4. 2 G. L. c. 58, § 20, supra page 175. [G. L. c. §§ 29,30 trust with the state treasurer one twentieth of one per cent of the average of such deposits by it for the year last preceding such assessment. Such assessment shall be collected in the same manner as taxes upon corporations. This statute originated in 1891 as a charge by the treasurer and receiver general of $2500 annually upon the corporations making the deposits for such extra clerical assistance as was required for the care and custody of the deposits.1 In 1901 it was put into its present form.2 Annual Reports of Commissioner Section 29 requires the commissioner of corporations and taxation to make an annual report to the legislature, in addition to his report relative to the apportionment of the state tax, containing (1) a statement of the transactions of his office for the preceding year, with tables of exempt property; (2) a table of the aggregate valuation of the counties, cities and towns; (3) a table of the amounts of property omitted from the regular assessment and assessed in December as omitted property; (4) a statement of the amount of income assessed under the income tax act, and the probable amount of taxes therein.1 Section 30 authorizes the commissioner after the lapse of five years to destroy certain returns required to be filed with him, 1 St. 1891, c. 233. 2 St. 1901, c. 281. 1 Other duties of the commissioner are as follows: Determination of value of machinery, poles, etc., of telephone and telegraph companies, Chap. 59, § § 39, 42, infra page 270. Furnishing books to assessors, Chap. 59, § 45, infra page 273. Abatement of taxes on telephone and telegraph companies. Chap. 59, § 73, infra page 302. Recommending revision of tax, Chap. 59, § 76, infra page 306. Duties relative to taxation of forest lands, Chap. 61, §§ 4, 15 infra page 426. Duties relative to plates, etc. for stock transfer stamps, and contracts thereunder, Chap. 64, § 4, infra page 600. Power to make rules and regulations, and prescribe forms, etc. in taxation of stock transfers, Chap. 64 § 7, infra, page 600. Duties under income tax, Chap. 62, §§ 35-53, infra pages 491 to 501 inc. Duties relative to corporation taxes, Chap. 63, § § 44-51, 67, 69, 71, infra pages 569 to 573, 589, 591, 593. Duties under inheritance tax. Chap. 65, infra pages 605 to 663 inc. Duties as commissioner of corporations, Chap. 156, § 3. Duty to petition for appointment of administrator of deceased person in certain cases, Chap. 193, § 3. G. L. c. 59] CHAPTER 59 ASSESSMENT OF LOCAL TAXES The Origin and Development of the Statutes The method of assessing the direct and general tax now in force in Massachusetts has come down to us from the first settlement of the colony with few radical alterations. State, county and town taxes, the two former apportioned upon the different towns and assessed with the town tax by the local assessors by an equal assessment upon polls and estates, have been familiar from the earliest times.1 It was provided in 1651 that "the lands and estates of all men shall be rated for all town charges . . . where the lands and estates shall lie, and their persons where they dwell." All persons were to be assessed and rated at one shilling and eight pence by the head. The estates of all merchants, shopkeepers and factors were to be "assessed by the rule of common estimation, according to the will and doom of the assessors." "All such persons as by the advantage of their arts and trades are more enabled to help bear the public charge than common labourers and workmen, as butchers, bakers, brewers, victualers, smiths, carpenters, taylors, shoemakers, joiners, barbers, millers and masons with all other manual persons and artists, such are to be rated for returns and gains, proportionable to other men for the produce of their estate." In 1665 it was provided that "gentlemen merchants strangers" bringing goods into the colony and making "their escapes without any payment to support the government of the place" might be assessed "according to the cargoes they shall bring into the country." 2 It will thus be seen that there was established during the colonial period a poll tax, a tax on real estate "where the lands shall lie," a tax on personal property where the owners dwelt, and a tax on non-residents doing business in the colony; and on this same basis, subject to certain exceptions and qualifications which will be noted later, the present system of taxation 1 Colony Ordinance, 1651, Anc. Chart., p. 69; Newburyport v. Essex County Commissioners, 12 Met. 211, 217 (1846). 2 Anc. Chart., pp. 69, 70. 3 Anc. Chart., p. 73. As to the methods of valuation employed during the colonial and provincial periods, see supra page 87. [G. L. c. 59 is established. Not only can the general system of taxation be traced back to the colonial legislation without any fundamental alteration, but the same is true of the method of appointing assessors, of collecting taxes," of appointing collectors, of fixing exemptions and of granting abatements. 4 7 6 Students of history will remember that Parliament maintained its independence and finally secured supremacy over the royal power more than in any other one way by refusing to "grant" to the king any permanent source of revenue, and that since the time of Magna Charta each assessment of taxes in England has been levied by authority of a special act of Parliament. The same system was employed in Massachusetts under the provincial government, and the general court each year enacted a statute which contained not only authority for the assessment of the annual province tax, fixed the amount thereof and apportioned it upon the various towns, but included all the statutory provisions in force in the province relating to exemptions from taxation and to the assessment, abatement and collection of direct taxes of every kind, for the province, counties, towns or subordinate districts, the amount of the local taxes being of course fixed by the appropriations of the respective towns. These provisions were enacted year after year without any alteration until some evil made itself felt and was rectified in the tax act of the ensuing year and in the acts of the years that followed. These statutes continued the system already established, namely a tax equally assessed on polls, on real estate where it lay, on personal estate where the owner dwelt and on incomes from a trade or profession. In 1742 appeared the first exception to the rule that personal property is taxed where the owner dwells, and thereafter merchants, traders and factors were assessed in the towns in which their shops were located. Other exceptions came later.1o In 1785 a statute relating to assessors and their duties made 4 G. L. c. 41, § § 24-27 inc., supra, page 154. 5 G. L. c. 60, infra pages 319 to 425 inc. 6 G. L. c. 41, § § 1, 39, supra pages 150, 158. 7 G. L. c. 59, § 5, infra pages 193 to 217 inc. 8 G. L. c. 59, § § 59-74 inc., infra pages 282 to 304 inc. 9 Infra page 239. 10 Machinery employed in manufacture in 1830; horses and cattle in 1821; no others before the Revised Statutes. |