Bank of America, N.A. v. Massachusetts Commissioner of Revenue

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By, Claire Carrabba of Clements Pajak LLC

In Bank of America, N.A. v. Massachusetts Commissioner of Revenue, the Appellate Tax Board determined that income received by certain foreign corporate trustees was subject to taxes under M.G.L. c. 62 § 10. The statute provides that trust income is subject to taxes if: (1) the income is received by trustees of a trust that was created by a Massachusetts inhabitant and has a trustee who is an inhabitant of Massachusetts; and (2) the income is accumulated for the benefit of Massachusetts inhabitants or for the benefit of unknown or unascertained beneficiaries. The parties disagreed over whether the corporate trustees were considered inhabitants of Massachusetts and thus subject to taxes under M.G.L. c. 62 § 10.

Although the corporate trustees had commercial domiciles in other states, the Board nonetheless considered them inhabitants of Massachusetts under M.G.L. c. 62 § 1(f) (2).   Because the corporate trustees did a substantial amount of business (operating and staffing physical offices, maintaining relationships with grantors and beneficiaries, administering and distributing trust assets, consulting with clients, reviewing trust instruments, and researching and discussing trust issues) in Massachusetts, they maintained a permanent place of abode as described in M.G.L. c. 62 § 1(f) (2) and were therefore subject to tax under M.G.L. c. 62 § 10.