SUMMARY: These guidelines explain a recent amendment made by an outside section of the Fiscal Year 2018 State Budget that allows the overlay account to be charged for interest due and payable on abatement refunds. St. 2017, c. 47, § 31. They also generally explain the statutory standard for maintaining an adequate overlay and the actions the Commissioner of Revenue (Commissioner) may take when approving a tax rate or determining available funds (free cash) to ensure compliance with that standard. Overlay is a single account to fund abatements and exemptions of committed real and personal property taxes for any fiscal year. The overlay amount is determined by the board of assessors (assessors) and may be raised in the tax rate without appropriation. Excess overlay is determined, certified and transferred by vote of the assessors to a Fund Balance Reserved for Overlay Released by the Assessors for Expenditures (overlay surplus). Overlay surplus may then be appropriated by the legislative body for any lawful purpose until the end of the fiscal year, i.e., June 30. Overlay surplus not appropriated by year-end is closed to the general fund undesignated fund balance. G.L. c. 59, §§ 23 and 25. Under the amendment, the overlay may now be charged for interest due taxpayers when abatements of paid taxes result in refunds. Previously, the interest was charged to an appropriation for that purpose, such as a short-term interest or treasurer’s general expense appropriation. No municipal action is necessary to implement this change. It is effective for any abatement granted on or after July 1, 2017 that generates an overpayment refund and interest obligation. These guidelines are in effect and supersede Informational Guideline Release (IGR) No. 16-104, Overlay and Overlay Surplus, and any inconsistent prior written statements or documents.