• Massachusetts: The Tech Strikes Back - State Won’t Collect Software Sales Tax Pending Appeal
  • September 25, 2013
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • In an update issued by the Massachusetts Department of Revenue (“DOR”) Monday, September 16, 2013, Tax Commissioner Amy Pitter announced:

    [T]he Department of Revenue (DOR) is extending by one month the deadline for vendors to file returns reporting sales and use taxes collected under a new law taxing certain computer and software services. The first reporting deadline will now be October 20, 2013.

    ‘In light of public statements from the Governor and legislative leaders voicing support for repealing these particular taxes, we want to minimize the administrative burden on businesses that are complying with the law and collecting sales taxes on their services,’ said Commissioner Pitter. ‘We are delaying the deadline until October for reporting and paying the taxes they may have been billing and collecting since the law went into effect July 31st.’

    The Multistate Tax Update previously covered the new so-called “software sales tax” or “tech tax” that was recently enacted in Massachusetts:

    The tech tax effectively broadened the sales tax base by taxing certain computer and software services. Without this delay, the first tech tax return and payment would be due Friday, September 20, 2013. The first return and payment is now due on Monday, October 21, 2013.

    Please note that this filing extension does not apply to returns and payments with respect to any other sales or use taxes.

    In recent days, repeal of the tech tax law has garnered increasing legislative support and the support of Governor Deval Patrick. Technology companies that provided services subject to this tax have expressed great concern over the administrative burdens with compliance and also overall confusion as to what services are subject to the new tax and which services are excluded. Based on the backlash, it appears likely (but clearly not certain) that the law will be repealed. However, if this law is repealed, there will likely be another legislative change on the horizon to shore up the loss of revenue (although some legislators have said no new tax would be proposed in lieu of the tech tax).

    The DOR issued guidance on the delay procedures under a new TIR 13-14: Extension of Due Date for First Reporting of Sales and Use Tax on Computer and Software Services.