Bank of America, N.A. v. Commissioner of Revenue , 474 Mass. 702 ( 2016 )

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SJC-11995
BANK OF AMERICA, N.A., trustee,1 vs. COMMISSIONER OF REVENUE.
Suffolk. March 7, 2016. - July 11, 2016.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.
Trust, Taxation. Taxation, Trust, Income tax. Fiduciary.
Domicil. Words, "Inhabitant."
Appeal from a decision of the Appellate Tax Board.
The Supreme Judicial Court granted an application for
direct appellate review.
Kevin P. Martin (Joshua M. Daniels with him) for the
taxpayer.
Kirk G. Hanson, Assistant Attorney General, for
Commissioner of Revenue.
Phoebe A. Papageorgiou, of the District of Columbia, & Brad
S. Papalardo, for Massachusetts Bankers Association & another,
amici curiae, submitted a brief.
BOTSFORD, J. In this 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
1
Of thirty-four trusts.
2
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.2
1. Background.3 The 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.
This 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;4 the
2
We acknowledge the amicus brief submitted by the
Massachusetts Bankers Association and American Bankers
Association in support of the bank.
3
The background facts are undisputed. This case was
submitted to the Appellate Tax Board (board) on the parties'
statement of agreed facts and sixty-four exhibits; in its
decision, the board made findings based on the statement of
agreed facts.
4
Effective February 22, 2008, Bank of America, N.A. (bank),
and United States Trust Company National Association (U.S.
Trust) were merged; the bank was the surviving entity. Like the
bank, U.S. Trust was a national banking association organized
3
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),5 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-
under Federal law and authorized by the Federal Comptroller of
Currency to act as a fiduciary. Its commercial domicil was in
New York, with its principal place of business located in New
York, New York. During 2007, U.S. Trust was serving as the
trustee or co-trustee of eleven of the thirty-four trusts
involved in this appeal, but after its merger with the bank in
February, 2008, the bank replaced U.S. Trust as trustee and
filed all the applications for abatement relating to the tax
year ending December 31, 2007 (tax year at issue), that are the
focus of this appeal. Hereafter, unless otherwise indicated,
the term "the bank" refers to the bank and U.S. Trust,
collectively.
5
Title 830 Code Mass. Regs. § 62.10.1 (2016) defines inter
vivos, or "living," trusts and distinguishes "resident inter
vivos trusts" from "non-resident inter vivos trusts" for
purposes of determining the amount of fiduciary income subject
to tax.
4
four applications for abatement. As a result, the thirty-four
applications were deemed denied pursuant to G. L. c. 58A, § 6.6
In 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 (c), 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.
The 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.
6
The remaining applications for abatement were still
pending before the Commissioner of Revenue (commissioner) as of
the time the board issued its decision.
5
Elliot Trust.7 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).
Throughout 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
7
During the tax year at issue, the bank was the sole
trustee of the R.K. Elliot Trust and co-trustee of the Hovey
Trust; U.S. Trust was the sole trustee of the Gordon Trust and
co-trustee of the J.M. Elliot Trust.
6
business within the Commonwealth" within the meaning of G. L.
c. 63, §§ 1, 2, 2A.8,9
Specifically 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
8
General Laws c. 63, §§ 1, 2, and 2A, relate to taxation of
banks and other financial institutions engaged in business in
the Commonwealth.
9
The facts stated in this paragraph relate specifically to
the bank, but the parties agree that during the tax year at
issue, U.S. Trust conducted banking business in the Commonwealth
and, like the bank, qualified as a "financial institution" that
was "engaged in business within the Commonwealth" within the
meaning of G. L. c. 63, §§ 1, 2, 2A.
7
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 Commonwealth."10
2. Discussion. a. Standard of review. "A 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).
10
The facts stated in this paragraph apply specifically to
the bank, but the parties have agreed that U.S. Trust engaged in
similar trust-related activities in the Commonwealth during the
tax year at issue.
8
b. Relevant statutes. General Laws c. 62 generally
concerns the taxation of income within the Commonwealth.
Section 10, which relates to trust income, provides in relevant
part:
"The income received by trustees or other fiduciaries
shall be taxed in the following manner:
"(a) The income received by trustees or other
fiduciaries described in subsection (c) of this section
shall be subject to the taxes imposed by this chapter to
the extent that the persons to whom the same is payable, or
for whose benefit it is accumulated, are inhabitants of the
commonwealth . . . . Income received by trustees or other
fiduciaries described in subsection (c) of this section
which is accumulated for unborn or unascertained persons,
or persons with uncertain interests shall be taxed as if
accumulated for the benefit of a known inhabitant of the
commonwealth.
". . .
"(c) The provisions of subsection[] (a) . . . of this
section shall apply to . . . trustees under a trust created
by a person or persons, any one of whom was an inhabitant
of the commonwealth at the time of the creation of the
trust or at any time during the year for which the income
is computed, or who died an inhabitant of the commonwealth,
any one of which trustees or other fiduciaries is an
inhabitant of the commonwealth . . . ."
As these provisions indicate, the fiduciary income tax described
in § 10 only applies to trust income when the residency or
inhabitance requirements for three distinct parties connected to
the trust are met. In particular, for the fiduciary income tax
prescribed by § 10 (a) to be imposed, at least one grantor or
creator of the trust, at least one or more of the beneficiaries,
9
and at least one trustee must be "inhabitants" of the
Commonwealth.
Section 1 of G. L. c. 62 contains definitions applicable to
the chapter, including the term "inhabitant." It provides in
relevant part:
"When used in this chapter the following words or
terms shall, unless the context indicates otherwise, have
the following meanings: --
". . .
"(f) 'Resident' or 'inhabitant', (1) any natural
person domiciled in the commonwealth, or (2) any natural
person who is not domiciled in the commonwealth but who
maintains a permanent place of abode in the commonwealth
and spends in the aggregate more than [183] days of the
taxable year in the commonwealth, including days spent
partially in and partially out of the commonwealth. . . .
The word 'non-resident' shall mean any natural person who
is not a resident or inhabitant."
G. L. c. 62, § 1 (f) (§ 1 [f]).
By its terms, the definition of "inhabitant" in § 1 (f)
refers solely to a "natural person," a term that does not
include a corporation, such as the bank. This leads to the
third relevant statute, G. L. c. 62, § 14 (§ 14), which states
in pertinent part:
"Corporations acting as trustee or in any other
fiduciary capacity shall, with respect to the income
received by them in that capacity, be subject to this
chapter in the same manner and under the same conditions as
individual inhabitants of the commonwealth acting in
similar capacities . . . ."
c. Board's decision. Before the board, the bank and the
commissioner defined the "sole issue presented" in the bank's
10
appeal to be whether the bank was an "inhabitant" of the
Commonwealth within the meaning of §§ 1 (f), 10, and 14.11
Recognizing the interplay among these three statutes, the board
considered whether, and if so, in what manner, the definition of
the term in § 1 (f) should be interpreted to include a
corporation. It first determined that in light of § 14's
explicit directive that corporate trustees be treated the same
as individual trustees in relation to fiduciary income tax, the
definition of "inhabitant" in § 1 (f) should be read to apply to
corporate trustees, and, turning to the terms of the definition,
the board focused specifically on the terms of § 1 (f) (2).12
Under § 1 (f) (2), a natural person who is a nondomiciliary
qualifies as an inhabitant if he or she "maintains a permanent
place of abode in the Commonwealth" and spends more than 183
days per year in the Commonwealth. To apply this definition to
11
The bank and the commissioner agreed that the subject
trusts were created by individuals who were "inhabitants" of the
Commonwealth at the time each created the trust, see G. L.
c. 62, § 10 (c); the parties also agreed that income received by
the trustees of each of these trusts during the tax year at
issue was "accumulated for unborn or unascertained persons or
persons with uncertain interests," and therefore was taxable "as
if accumulated for the benefit of a known inhabitant," see § 10
(a). Accordingly, whether the bank was required to pay
fiduciary income tax pursuant to G. L. c. 62, § 10, on behalf of
the trusts in question turns on whether the bank itself
qualifies as an "inhabitant."
12
The board recognized that G. L. c. 62, § 1 (f) (1), with
its requirement of domicil in the Commonwealth, could not be
applied to the bank, given the bank's commercial domicil in
North Carolina (and New York, for U.S. Trust).
11
a corporation, the board considered the meaning of "permanent
place of abode," a phrase not statutorily defined. Based on
dictionary definitions, the board ultimately determined that "a
corporation will qualify as an inhabitant of the Commonwealth
within the meaning of §§ 1 (f) and 10 (c) if it maintains a
permanent place in the Commonwealth at which it abides, i.e.,
where it continues to be and is stable in some state or constant
in some relationship for the requisite number of days of a
taxable year."13 The board then applied this rule to the
underlying facts, and concluded that the bank satisfied the
criteria to be an "inhabitant" during the tax year at issue
through its presence and activities in Massachusetts during that
year.
d. Bank's claims of error. i. "Inhabitant" requirement
as applied to a corporate trustee. The bank argues that because
the definition of "inhabitant" under § 1 (f) is specific only to
"natural person[s]," it manifestly does not include corporate
trustees, and that the traditional criterion for imposing the
fiduciary income tax on corporations -- that the corporation was
domiciled in the Commonwealth -- has not been met because the
13
Before turning to dictionary definitions, the board
looked to a definition of "permanent place of abode" provided in
the commissioner's Technical Information Release 95-7 (Jan. 10,
1996), 2 Official MassTax Guide, at PWS-82 (Thomson Reuters
2016) (release). The board found the release not to be relevant
because it was clear that the release did not attempt to define
"permanent place of abode" as it applied to corporations.
12
bank, and U.S. Trust, had their commercial domicils in States
other than Massachusetts; at the very least, the bank contends,
§ 1 (f) is ambiguous and the taxpayer trusts should receive the
benefit of any such ambiguity. The bank further argues that
§ 14 does not require the application of § 1 (f) (2) to
corporations. In the bank's view, these reasons, alone or in
combination, compel the conclusion that the fiduciary income tax
does not apply to the subject trusts because the inhabitance
requirement for the trustee under § 10 (c) is not satisfied. We
disagree.
The Legislature amended the definition of "inhabitant" in
1995 to add § 1 (f) (2) specifically to include a class of
individuals who are not Massachusetts domiciliaries, namely,
individuals domiciled outside the Commonwealth who maintain a
"permanent place of abode" and spend more than 183 days in
Massachusetts. See St. 1995, c. 38, § 65. Under § 14,
corporate trustees are to be treated "in the same manner and
under the same conditions as individual inhabitants." Keeping
in mind that "[t]he words of a statute must be construed in
association with the general statutory plan," Commissioner of
Revenue v. Wells Yachts South, Inc., 406 Mass. 661, 664 (1990),
the board's interpretation of the definition of "inhabitant" in
§ 1 (f) (2) as applicable to a corporate trustee was a
reasonable one. See generally Attorney Gen. v. Commissioner of
13
Ins., 450 Mass. 311, 319 (2008) (substantial deference given to
reasonable interpretation of statute by agency charged with
administrative enforcement). This is particularly true in view
of the specific instruction in G. L. c. 62, § 1, that when used
in the chapter, the words defined in § 1 are to have the
meanings set forth in that section "unless the context dictates
otherwise." In light of § 14's explicit directive to treat
individual and corporate trustees the same for purposes of the
fiduciary income tax, we agree with the commissioner that the
requirement of § 10 (c) -- that at least one trustee of a trust
be "an inhabitant of the commonwealth" -- provides a context in
which the definition of "inhabitant" cannot be limited to a
"natural person," but rather must be expanded to include a
corporate entity.14 Cf. Springall v. Commissioner of Revenue,
14
Insofar as the bank asserts that, in light of the
orientation of G. L. c. 62, § 1 (f) (2), toward individuals,
there is no reason to interpret that portion of G. L. c. 62, § 1
(f) (§ 1 [f]), as applying to corporations, it is significant
that when the Legislature amended § 1 (f) in 1995 to add § 1 (f)
(2), it did not amend G. L. c. 62, § 14 (§ 14), in any respect.
As the commissioner points out, the directive in § 14 that for
purposes of the fiduciary income tax, corporate trustees are
responsible "in the same manner" as individual inhabitants
"acting in similar capacities" has been in effect since 1916.
See St. 1916, c. 269, § 9. The Legislature is presumed to have
been aware that in broadening the definition of "inhabitant" in
1995 by adding § 1 (f) (2), the expanded definition would also
apply to corporate trustees through § 14. See, e.g., Boston
Water & Sewer Comm'n v. Metropolitan Dist. Comm'n, 408 Mass.
572, 578 (1990) ("the Legislature is presumed to understand and
intend all consequences of its acts" [quotation and citation
omitted]).
14
391 Mass. 23, 25 n.2 (1984) ("Surely, the Legislature did not
intend to treat a trust differently for the purposes of G. L.
c. 62, § 9, depending on whether a fiduciary was a natural
person or a corporation"). To read § 14 as not imposing this
requirement on corporations would be essentially to deprive the
section of meaning, an undesirable result. See, e.g., Volin v.
Board of Pub. Accountancy, 422 Mass. 175, 179 (1996) ("We do not
interpret a statute so as to render it or any portion of it
meaningless" [quotation and citation omitted]). We therefore
reject the bank's argument that, in connection with its
activities as a trustee of the subject trusts, it cannot be
subject to the fiduciary income tax imposed under § 10 solely
because it is not domiciled in Massachusetts.
ii. The bank's presence and activities in the
Commonwealth. The bank further argues that, even if § 1 (f) (2)
applies to corporations, the board erred by creating and
applying a "presence and activities test" to determine whether
the bank met the criteria set forth in § 1 (f) (2).15 In the
15
In ruling that the bank qualified as an inhabitant of the
Commonwealth during the tax year at issue, the board pointed to
the bank's "numerous and substantial activities" in the
Commonwealth during the tax year at issue, referencing the
parties' agreed-upon facts about (1) the general commercial
activities conducted by the bank in the Commonwealth, (2) the
bank's Commonwealth-centered activities relating specifically to
the four appellant trusts, and (3) the bank's activities in the
Commonwealth relating to trust administration and development of
trust administration business more generally. The bank refers
15
bank's view, the test treats corporate trustees less favorably
than individual trustees, in violation of § 14's mandate that
they be treated "in the same manner." Specifically, the bank
asserts that in relation to individual trustees, the test under
§ 1 (f) (2) is narrow, requiring such trustees to have a
substantial personal nexus to Massachusetts, whereas the same is
not required of corporate trustees. Thus, the argument goes, an
individual trustee who is not a Massachusetts domiciliary must
spend more than half the tax year in the Commonwealth to qualify
as an inhabitant, making it unlikely that he or she would be
deemed an inhabitant or resident of more than two States; but a
corporate trustee, however -- at least under the board's
presence and activities test -- could be treated as an
inhabitant of the Commonwealth for purposes of the fiduciary
income tax under § 10 if the trustee maintains a single office
in Massachusetts for more than one-half year, regardless of
whether the corporation conducts any trust administration
activities here. The bank suggests a more narrow test for a
corporate trustee, such as one that turns on whether there is a
predominant corporate presence in Massachusetts, which might be
measured by the location of employees, or the location of
assets, or the source of corporate revenue. In the alternative,
to the board's reference to all these activities as the board's
"presence and activities test."
16
the bank argues that we should adopt the type of test that the
bank suggests the commissioner previously suggested to the
board: that corporate trustee inhabitance and, in turn,
fiduciary income tax liability should be focused on whether the
trustee's administration of the particular trusts at issue takes
place within Massachusetts. The bank suggests that, under such
a standard, it is unclear whether the bank would be subject to
the fiduciary income tax in relation to the subject trusts
because, as the board found, some of the bank's trust
administration activities were conducted outside the
Commonwealth.
We do not share the bank's view that for the purpose of
assessing the inhabitance of a corporate trustee, the board has
created a formal "presence and activities" test that focuses on
the corporation's general business presence in the Commonwealth.
Rather, we understand the board to have evaluated the specific,
agreed-upon facts presented and to have reached its conclusion
that the bank qualified as an inhabitant of the Commonwealth
based on those facts -- facts that included that, in terms of
Massachusetts-based activities, the bank both conducted general
banking transactions, maintaining over 200 branch offices
staffed by bank employees, and performed work as a corporate
trustee of the particular trusts at issue here. With respect to
the latter, the board found that the bank:
17
"operated and staffed offices to fulfill some of their
obligations as trustees of the [subject] Trusts; maintained
relationships with the beneficiaries of the [subject]
Trusts and . . . decided when to make distributions of
trust assets to beneficiaries; administered the assets of
the [subject] Trusts; consulted with clients and
prospective clients [of other trusts] about [the bank's]
trust services; . . . provided places for execution of
[other] trusts which named [the bank or U.S. Trust] as
fiduciary; and researched and discussed issues involving
the [subject] Trusts and discussed such issues with
grantors, beneficiaries and/or their representatives."
The bank points to the language of § 14 providing that a
corporate trustee will "be subject to [the fiduciary income tax
provisions of G. L. c. 62] in the same manner and under the same
conditions as individual inhabitants of the commonwealth acting
in similar capacities" (emphasis added). We agree with the bank
that the quoted language from § 14 requires a focus on the
actions within the Commonwealth of a corporation acting as a
corporate trustee, including specifically acting as trustee of
the trust or trusts potentially subject to fiduciary income tax
liability, and not just on the corporation's general business
activities. Put more generally, we interpret the three
interrelated statutes that apply in this case, §§ 1 (f) (2), 10,
and 14, to mean that a corporate trustee will qualify as an
"inhabitant" of the Commonwealth within the meaning and for the
purposes of these statutes if it: (1) maintains an established
place of business in the Commonwealth at which it abides, i.e.,
where it conducts its business in the aggregate for more than
18
183 days of a taxable year; and (2) conducts trust
administration activities within the Commonwealth that include,
in particular, material trust activities relating specifically
to the trust or trusts whose tax liability is at issue.
We conclude that the board's decision in the present case
is consistent with this interpretation of statutory
requirements. It concluded in effect that for a corporate
trustee such as the bank to be deemed an inhabitant under § 1
(f) (2), there must be proof that the corporation has an
established presence in the Commonwealth through, e.g.,
maintaining a permanent office or offices in Massachusetts and
engaging in regular business activities here, for more than one-
half of the tax year at issue. Such a presence corresponds to
the presence of an individual inhabitant at a permanent place of
abode for more than 183 days in a year. Certainly the agreed-
upon facts establish that the bank met this requirement. But as
the portion of the board's decision quoted supra shows, the
board did not stop with the bank's general corporate activities
within the Commonwealth. Rather, the board considered the
Commonwealth-centered activities conducted by the bank in its
capacity as corporate trustee, including activities that were
centered on the subject trusts. And we agree with the board
that the bank's activities relating to administration of the
subject trusts demonstrate the bank's material and specific
19
trust-related nexus to Massachusetts for more than 183 days of
the tax year at issue. Accordingly, the board did not err in
ruling that the bank was subject to the fiduciary income tax
imposed by § 10.16
iii. Dormant commerce clause. Finally, the bank argues
that the board's decision, and in particular its interpretation
of § 1 (f) (2) as applying to the bank, "raises serious
questions" under the dormant commerce clause of the United
States Constitution. See art. I, § 8, cl. 3, of the United
States Constitution.17 The bank did not raise a constitutional
claim before the board, and to the extent it seeks to do so
here, we consider the claim to be waived.18 See G. L. c. 58A,
16
The bank argues further that the board's presence and
activities test violates fundamental principles applicable to
the interpretation of Massachusetts statutes, including that the
test puts a premium on corporate structure, discourages
companies from establishing or acquiring offices in
Massachusetts, and places an unreasonable administrative burden
on national banks. There is no evidence in the record to support
these assertions.
17
The bank states specifically in its reply brief that it
"does not claim that [§ 1 (f) (2)] violates the [d]ormant
[c]ommerce [c]lause either facially or as applied here."
Rather, it makes the argument to persuade us "to adopt a reading
of [§ 1 (f) (2)] that avoids constitutional doubts across the
sweep of [the section's] reasonably foreseeable applications."
18
The bank did not raise any argument under the dormant
commerce clause before the board and the board made no rulings
with regard to the dormant commerce clause as applied to the
facts on record before it. Indeed, the bank specifically stated
in its reply brief to the board that it "did not argue the
specter of multistate taxation as a basis for relief" and that
20
§ 13 ("The court shall not consider any issue of law which does
not appear to have been raised in the proceedings before the
board"). See also Minchin v. Commissioner of Revenue, 393 Mass.
1004, 1005 (1984),quoting New Bedford Gas & Edison Light Co. v.
Assessors of Dartmouth, 368 Mass. 745, 752 (1975) ("To raise a
constitutional question on appeal to this court from the board,
the taxpayer must present the question to the board and, in so
doing, make a proper record for appeal. Otherwise, the taxpayer
waives the right to press the constitutional argument").19
3. Conclusion. The decision of the Appellate Tax Board is
affirmed.
So ordered.
"there is no constitutional issue raised in this matter." The
bank's argument below -- that, if other States were to follow
Massachusetts's lead in taxing fiduciary income on the basis of
a corporation's residence in those States, it could lead to
"potential constitutional implications" -- was insufficient to
raise a particularized claim of error warranting review by this
court under the dormant commerce clause.
19
Although this case does not require us to consider a
dormant commerce clause challenge to § 1 (f) (2) or the related
statutory provisions governing the fiduciary income tax, it
bears pointing out that (1) under G. L. c. 62, § 6 (a), an inter
vivos trust subject to the fiduciary income tax in Massachusetts
would be entitled to a credit for any taxes paid with respect to
that income to another State; and (2) for such a trust to be
subject to the fiduciary income tax here, not only must the
corporate trustee be an inhabitant of the Commonwealth, but so
must the creator of the trust as well as at least one
beneficiary. See G. L. c. 62, § 10 (a), (c).