[G. L. c. 62, § 21, 22 personal relations between the partners, so that one partner cannot transfer his interest in the partnership to a stranger to the agreement without the consent of his associates, and unincorporated associations, the shares in which are transferable in the same manner as stock in corporations, but which are technically partnerships when the control of the affairs of the association is in the hands of the shareholders rather than of the trustee who holds the legal title to the property of the association. The taxation of such partnerships is governed by section one, paragraph (c), (d) and (e) of this chapter.

The mere fact that shares in an unincorporated association are subject to a restriction requiring the approval of the association, or of a third party, before they can be transferred, or requiring that they be first offered for sale to the association, does not necessarily establish the fact that the shares are not transferable, within the meaning of the statute.

Returns of Income

SECTION 22. Every individual inhabitant of the commonwealth, including every partnership, association or trust, whose annual income from all sources exceeds two thousand dollars shall annually make a return of his entire income, except income derived (a) from real estate, (b) from dividends exempt from taxation under section one, (c) from interest upon bonds or other obligations of the United States, (d) from interest upon such bonds, notes and certificates of indebtedness of the commonwealth and political subdivisions thereof as are exempt from taxation under clause twenty-fifth of section five of chapter fifty-nine, (e) from loans secured exclusively by mortgage of real estate, taxable as real estate, situated in the commonwealth, to an amount not exceeding the assessed value of the mortgaged real estate less the amount of all prior mortgages, and (f) from wages or salaries received from the United States. Every other individual inhabitant, including every partnership, association or trust, who receives income taxable under section one or subsection (a) or (c) of section five shall make an annual return of such taxable income.

This section not only requires a return from every person actually taxable under any of the provisions of the chapter and from every person who would be taxable but for the fact that his total income is under six hundred dollars, but also requires

G. L. c. 62, § 22]

a return from every person whose total income is over two thousand dollars even if none of such income is taxable, although no one (except for the purpose of certain exemptions and deductions) is required to disclose the amount of his income not taxed by this act. The object is a practical one; namely to compel every person whose standard of living indicates an income of two thousand dollars or more to put himself on record under oath as not having taxable income if he has none, rather than to leave to the public authorities the burden of guessing whether a man in obviously comfortable circumstances who failed to file a return had in fact no taxable income or was evading taxes which he should properly pay. The sources of income which need not be returned are enumerated in the statute rather than those which must be, and consist of those which are clearly not taxable; the object being to prevent the taxpayer from always giving himself the benefit of any doubt and omitting from his return all income the taxability of which might be questionable. By inadvertence interest upon savings deposits was omitted from the list of income which need not be returned, but the commissioner, by virtue of the latitude given him in preparing returns, has not required a statement of such income.

Income received by beneficiaries from fiduciaries who are bound to make a return under this act, and income received by a partner from a partnership of which he is a member, are not mentioned in the list of classes of income upon which a return need not be made. In practice, however, the commissioner does not require a return of such income, although he requires the taxpayer to state whether he has received any such income and if he answers in the affirmative to designate the fiduciary or partnership from which the income was received, so that the commissioner can ascertain whether such fiduciary or partnership has filed a return.

The statute contemplates the signing of a return by the taxpayer himself and not by an agent or attorney. Provision is made in section twenty-nine for an extension of the time for filing a return in case of sickness, absence or other disability. In extreme cases, however, in which it will be obviously impossible for the taxpayer to personally sign a return within a long and indefinite period, the commissioner will accept a return signed by an agent or attorney.

[G. L. c. 62, §§ 22-24 One does not concede that he is taxable by filing a return. In a doubtful case a return should be filed; otherwise the penalties provided by law would be incurred if the final decision of the contested question should be adverse. The person filing the return should, however, set out in his return his contention, and the grounds upon which it is based, whether he denies his liability to the tax on the ground that he is not an inhabitant or on the ground that his income does not come within the provisions of the law.

Fiduciaries' Returns

SECTION 23. Every executor, administrator, trustee, guardian, conservator, trustee in bankruptcy, assignee for the benefit of creditors and receiver, other than a receiver of a domestic corporation, and every other person receiving income taxable under this chapter, shall make an annual return of his taxable income as provided in this chapter.

In the case of a resident of Massachusetts who died during a taxable year after having received taxable income, his executor or administrator must file a return of all income which would have been taxable to the decedent if he had lived (except income from professions, employments, trade or business received by the decedent during the taxable year prior to his death) to which he is required to make oath that it is true and complete to the best of his knowledge and belief. This return must be filed before the first day of March in the following year, unless the executor or administrator was not appointed until after the first day of February in such year, in which case it must be filed within sixty days after his appointment. This return is in addition to and distinct from the return which the executor or administrator is required to file with respect to taxable income received after his appointment.

No return is required of an assignee, trustee in bankruptcy or receiver of a corporation, except in the case of a receiver of a foreign corporation holding a fund for the benefit of Massachusetts creditors, since such fiduciaries are not subject to the tax.

Further Provisions Respecting Returns

SECTION 24. Returns under the two preceding sections shall be on oath, and shall be filed with the income tax assessor for the district

G. L. c. 62, §§ 24, 25]

where the taxpayer resides or has his principal place of business or, at the option of the taxpayer, with the commissioner, shall be made in such form as the commissioner prescribes, and shall contain such further information as he deems pertinent. The return shall be made on or before March first in each year, and, except as provided in sections seven and twenty-five, shall relate to the income received during the year ending on December thirty-first preceding.

Time as of Which Liability to Tax is Fixed

SECTION 25. Every individual who is an inhabitant of the commonwealth at any time between January first and June thirtieth, both inclusive, in any year, and every executor, administrator, trustee or other fiduciary in office between said days in any year, who is such inhabitant, or who derived his appointment from a court of this commonwealth, and the estate of every deceased inhabitant of the commonwealth, shall be subject to the taxes imposed by this chapter. Every such individual or fiduciary shall file a return under section 'twenty-two or twenty-three if he has in the preceding year received. income taxable under this chapter, and an executor or administrator shall file a return under section twenty-three if his decedent in the preceding year received any such income not returned by the decedent. If a person has become an inhabitant of the commonwealth or has been appointed an executor or administrator after February first in any year, the return shall be due and shall be filed within ninety days after he becomes such inhabitant or receives such appointment.

Under the earlier statutes liability to taxation in any city or town was determined by the domicile of the taxpayer on April first in each year, and in order to establish domicile in towns in which the tax rate was low migrations often occurred just prior to April first. The present law however bases liability to taxation upon domicile in this commonwealth at any time within the first six months of the year and thus discourages temporary absences as a means of evading the tax.

It is to be noted that under the statute liability to taxation is not based upon the receipt of taxable income by a person while resident in Massachusetts; but the tax is a tax upon individual inhabitants for the year in which the return is filed, measured by ability to pay as evidenced by income from sources not

[G. L. c. 62, §§ 25-27 otherwise taxed in the preceding calendar year. Since income of the current year cannot be determined until the year has expired, the tax cannot be levied, like a property tax, with reference to the state of things existing on the day as of which the tax is assessed, and, from the necessity of the case, the income of the previous year is taken as the measure of the tax; but the theory that the income is the measure and not the subject of the tax is consistently followed except in the provision, established by an amendment after the enactment of the original act, that the income (other than business income) of an inhabitant who died during a taxable year shall be taxed to his executor in the following year. Thus one who becomes a resident after the first day of January is taxable for income received while he was a resident of another state; and, conversely, this commonwealth makes no attempt to tax a person who receives income while living in this commonwealth but who removes therefrom prior to the first day of January in the following year, or to tax a non-resident who derives income from a business carried on in this commonwealth year after year.

The supreme judicial court of the commonwealth however held that the theory upon which the statute was based was unsound; that the tax is a property tax and cannot be levied with respect to property which is not within the jurisdiction of the commonwealth, and that consequently a person who changes his domicile to Massachusetts cannot be taxed upon income received by him before the change of domicile was made and while he was a resident of another state.1

Notices and Returns

SECTION 26. The commissioner shall prepare blanks for the returns required by sections twenty-two and twenty-three and shall cause them to be distributed throughout the commonwealth; but no person shall be excused from making the return by failure of the commissioner to send or give one of the blanks to him.

SECTION 27. The commissioner shall annually give seasonable notice of the requirements of sections twenty-two to twenty-five, inclusive, by posting or in any other suitable manner, not later than January fifteenth, in every town in the commonwealth.