Massachusetts: Governor’s Proposed Budget Includes Real Time Sales Tax Remittance

In Massachusetts, Governor Baker’s proposed budget includes changes that would mandate faster remittance of sales tax collected. These changes would be implemented in two phases. Under current law, retailers are not required to remit sales tax collected until the 20^th day of the following month. According to the Governor’s budget proposal, this “antiquated process” was established during the time of manual cash registers, handwritten checks, and mechanical adding machines. Under the budget proposal, retailers that collect more than $100,000 in sales tax or taxes on accommodations and meals in the previous 12 months would be required to make a preliminary remittance taxes collected during the first three weeks of the month in the final week of the same month. Remittance for the final week and reconciliation of the monthly filing would continue to occur in the following month. The second phase of the proposal would, beginning in 2023, require retailers and credit card processors to capture sales tax at the moment of purchase and remit taxes on credit card and other electronic transactions on a daily basis.  According to the proposed budget, retailers already currently file and remit collections electronically, and this new requirement would further modernize and enhance collections.  The daily or real-time remittance has been proposed by Governor Baker in prior years; the retail community has opposed the measure on the basis that it would impose substantial costs on businesses and that the technology for such a system does not exist. Requiring the first three weeks’ collections to be remitted in the current month is projected to accelerate over $300 million of sales tax receipts into FY 2021.  For more information, please contact Joseph Senier at 617-988-1787.