transactions

  • The Viridian
  • 200-residential unit development, Boston, MA
  • Advanced Engineered Products, Inc.
  • Asset sale to Curtiss Wright Flow Control Services Corporation
  • Abbey Landmark
  • Sale of The Landmark Center, Boston, MA

Elimination Of Massachusetts Computer Service Sales & Use Tax

October 1, 2013

The despised and highly criticized sales and use tax on Massachusetts computer services has been repealed.  Just a few months ago, on July 24, 2013, the Commonwealth of Massachusetts announced Technical Information Release (TIR) 13-10 which allowed the state to apply sales and use tax to certain services related to computer system design and to modification, integration, enhancement, installation or configuration of standardized or prewritten software.  These changes were made effective July 31, 2013.

Late last week, Governor Deval Patrick signed legislation approved by the Massachusetts House of Representatives (by 156 to 1 vote) and the Senate (by unanimous vote) that eliminates the sales and use tax imposed on computer related services under TIR 13-10. The repeal is effective retroactively to July 31, 2013, the date the tax initially took effect.  TIR 13-17 contains procedures set forth by the Department of Revenue (“DOR”) for dealing with taxes that have already been collected under the now-repealed computer services tax.  Sellers that have collected the tax and filed sales tax returns with the DOR are required to file for abatement electronically.  The DOR is required to refund all taxes that were remitted during the time the tax was in effect.  Sellers that have collected the tax, but not yet remitted the tax to the DOR, are required to make reasonable efforts to return those amounts to purchasers and file for abatement electronically if they have already filed returns reporting the tax.  A taxpayer filing for abatement is required to file by December 31, 2013.  Persons who failed to collect or pay tax on these transactions will not be subject to penalties.

The repeal has no effect on the application of the sales and use tax to other sales, which means that sales of prewritten software and telecommunications services remain subject to the Massachusetts sales and use tax.

If you have any questions about this topic, please contact any of the following attorneys in our Tax Group: Lawrence L. AthanDeborah DiVerdi CarlsonIra J. Deitsch and Steven S. Meyer.

Client Advisory is provided for information purposes only, and does not constitute legal advice. According to Mass. SJC Rule 3:07, this material may be considered advertising. ©2013 Posternak Blankstein & Lund LLP. All rights reserved.

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