Massachusetts: Budget Bill Would Require Accelerated Sales Tax Payments

The fiscal year 2021 Massachusetts appropriations bill has passed the House and Senate in somewhat different versions. Each chamber’s bill would require certain vendors to make accelerated sales tax payments. Specifically, vendors with sales tax liability of more than $150,000 in the preceding calendar year (and operators with room occupancy tax liability of the same amount) would be required to remit taxes collected on any taxable sale made on or before the twenty-first day of the filing period by the twenty-fifth day of that period. In other words, taxes related to sales made the first three weeks of the month would need to be remitted by the 25^th. The accelerated payment schedule would not apply to those filing sales tax returns as a materialman (House version). Both versions provide for a 5 percent penalty on any underpayments arising under the new law, but the Senate bill provides that no penalty is to be assessed if the amount remitted by the 25^th of the month is at least 70 percent of the amount owed for the entire filing period. Under current law, returns and tax payments are generally due the 20^th day of the month after the period ends. The accelerated provisions in the appropriations bill appear to be a compromise of sorts, as Governor Baker had previously advocated for real-time sales tax remittance. Although both the House and Senate have approved a version of the bill that include these provisions, there are other differences to be worked out before the bill is presented to the Governor. There is no specific effective date in the bill for the accelerated remittance provisions, and the budget bill is designated as an emergency bill in its preamble. Therefore, it appears that the accelerated sales tax payment provisions would become effective immediately upon the bill being signed by Governor Baker. Please contact Ryanne Tannenbaum at 614-988-1729 for more information on this change.