Heard: March 7, 2016.
from a decision of the Appellate Tax Board. The Supreme
Judicial Court granted an application for direct appellate
P. Martin (Joshua M. Daniels with him) for the taxpayer.
Hanson, Assistant Attorney General, for Commissioner of
A. Papageorgiou, of the District of Columbia, & Brad S.
Papalardo, for Massachusetts Bankers Association &
another, amici curiae, submitted a brief.
Present: GANTS, C.J., SPINA, CORDY, BOTSFORD, DUFFLY, LENK,
& HINES, JJ.
case, we consider whether Bank of America, N.A. (bank), in
its capacity as a corporate trustee of several inter vivos
trusts, qualifies as an "inhabitant" and
accordingly is subject to the fiduciary income tax under G.
L. c. 62, § 10, even though the bank is not domiciled in
Massachusetts. Considering the bank's appeal from a
decision of the Appellate Tax Board (board) in which the
board determined that the bank did qualify as an inhabitant,
we affirm the board's decision on the record of this
case, but on somewhat different grounds.
bank is a national banking association authorized to act as a
fiduciary. At all relevant times, the bank's commercial
domicil was in North Carolina, with its principal place of
business in Charlotte, North Carolina.
case concerns appeals by the bank from the denials, by the
Commissioner of Revenue (commissioner), of applications for
abatement of fiduciary income taxes paid by thirty-four inter
vivos trusts. The taxes were paid by the bank in its capacity
as trustee or co-trustee of each of the thirty-four
trusts; the taxes paid related to the tax
year ended December 31, 2007 (tax year at issue). In 2011,
the bank took the position that these thirty-four and similar
inter vivos trusts of which the bank served as trustee or
co-trustee did not qualify as "resident inter vivos
trusts, " as described in 830 Code Mass. Regs. §
62.10.1(1) (b) (2016),  and therefore were not subject to
fiduciary income tax under G. L. c. 62, § 10 (§
10). Accordingly, the bank filed with the commissioner 2, 987
applications for abatement of the tax and refund of all taxes
paid in the tax year at issue; applications for abatement on
behalf of the thirty-four trusts involved in the present
appeal were included. After six months passed without a
decision from the commissioner, the bank withdrew its consent
to extend the time for the commissioner to act with regard to
these thirty- four applications for abatement. As a result,
the thirty-four applications were deemed denied pursuant to
G. L. c. 58A, § 6.
November, 2011, the bank filed petitions with the board under
G. L. c. 58A, § 7, appealing the denial of the
thirty-four abatement applications; the abatements sought
totaled $2, 287, 707. The parties chose four of the
thirty-four trusts (subject trusts) to serve as
representative trusts for the purposes of the appeal, and
agreed that the same dispositive question of law applied to
the remaining thirty trusts. The board issued its findings of
fact and report on June 10, 2015, and concluded that the
bank, in its capacity as trustee, was an inhabitant of the
Commonwealth within the meaning of G. L. c. 62, §§
1 (f) and 10 (c0, during the tax year
at issue and that the subject trusts were resident inter
vivos trusts subject to the fiduciary income tax under G. L.
c. 62, § 10 (a.) . The bank filed a notice of appeal
from the board's decision and this court granted the
bank's application for direct appellate review.
agreed-to facts, which are set out in the board's
decision, include the following. The four representative
trusts that were the subject of the board's decision are
the R.K. Elliot Trust, the Hovey Trust, the Gordon Trust, and
the J.M. Elliot Trust. Each of these trusts is an inter
vivos trust created by an individual who was an inhabitant of
the Commonwealth at the time of the trust's creation, and
each trust had become irrevocable prior to the tax year at
issue. During that year, none of the subject trusts had any
Massachusetts source income that was taxable under G. L. c.
62, § 5A, and no identified beneficiary to whom income
was payable from these trusts was an inhabitant of the
Commonwealth. However, it is undisputed that income received
in relation to each of the subject trusts was
"accumulated for unborn or unascertained persons, or
persons with uncertain interests" within the meaning of
G. L. c. 62, § 10 (a).
the tax year at issue, the bank sought out and entered into
banking and other commercial relationships, including making
loans, with residents and with business entities in the
Commonwealth; conducted business in no fewer than 200 branch
offices located in the Commonwealth that were staffed by
Commonwealth residents who were the bank's employees; and
qualified as a "financial institution" that was
"engaged in business within the Commonwealth"
within the meaning of G. L. c. 63, §§ 1, 2,
with respect to trust activities relating to the subject
trusts, the bank performed the following activities in the
Commonwealth during the tax year at issue: operated and
staffed offices for the purpose of fulfilling some of the
bank's obligations as a trustee of those trusts;
maintained relationships with the trusts' beneficiaries,
and decided when to make distributions to the beneficiaries
pursuant to the trust documents; administered the trusts'
assets and retained certain records relating to trust
administration; and conducted research on issues relating to
the trusts and discussed such issues with the trusts'
grantors, beneficiaries, and their representatives. The bank
also performed certain trust-related activities in the
Commonwealth that related to trust administration more
generally, including consulting with clients and prospective
clients about the bank's trust services; discussing
accounts with grantors and beneficiaries of other trusts for
which the bank served as trustee; reviewing proposed trust
instruments with clients; and providing a place for persons
to execute trusts that named the bank as fiduciary. However,
bank personnel located outside the Commonwealth also
performed trust-related activities in relation to the subject
trusts, and "policy and procedures related to
administrative and investment components of trusts generally
were formulated by [bank] personnel located outside the
Standard of review.
decision by the board will not be modified or reversed if the
decision 'is based on both substantial evidence and a
correct application of the law.'" Capital One
Bank v. Commissioner of Revenue, 453
Mass. 1, 8, cert, denied, 557 U.S. 919 (2009), quoting
Boston Professional Hockey Ass'n v.
Commissioner of Revenue, 443 Mass. 276, 285 (2005).
"Because the board is authorized to interpret and
administer the tax statutes, its decisions are entitled to
deference. . . . Ultimately, however, the interpretation of a
statute is a matter for the courts" (citation omitted).
Onex Communications Corp. v.
Commissioner of Revenue, 457 Mass. 419, 424 (2010) .
Laws c. 62 generally concerns the taxation of income within
the Commonwealth. Section 10, which relates to ...