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

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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).