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Sales of virtual computing offerings, including remote access, remote support, and online conferencing, are subject to Massachusetts sales and use tax when sold to customers located in Massachusetts.  The sales are subject to tax because the true object of the transactions is the use of computer software. The fact that the provider may provide personal and professional services in connection with the offerings is inconsequential. The customer’s involvement with and use of the provider’s software with these offerings is essential to meeting the customer’s objectives.  Each of the virtual offerings is designed so that the customer accesses and uses prewritten software with little or no interaction with the provider’s employees.   No analysis, content, or data is provided to the customer by the provider beyond the software’s functionality.  As a result, the customer is purchasing the right to use the provider’s software, and the sale is subject to sales and use tax. (Letter Ruling 12-10, Massachusetts Department of Revenue, September 25, 2012)

(06/12/2013)

The Massachusetts Department of Revenue has provided guidance on the tax treatment of promotional vouchers sold by companies such as Groupon and LivingSocial. For purposes of the department’s directive, a "qualifying promotional voucher" must clearly state the face value and the amount paid by the customer and must remain valid for redemption for at least the amount paid by the customer indefinitely. A sale of a voucher is not subject to tax at the time of sale but becomes subject to tax when the voucher is redeemed. Upon being redeemed, a qualifying voucher is treated like a retailer’s coupon. The sales price subject to tax is the amount paid by the customer for the voucher plus any additional consideration paid by the customer to the vendor such as for additional items or an upcharge above the voucher. The difference between the promotional value of the voucher and the amount the customer paid for the voucher is excluded from the taxable sales price as a cash discount.  Non-qualifying promotional vouchers, including those that do not state the amount paid by the customer, are not treated as retailer’s coupons.  For non-qualifying promotional vouchers, no reduction should be made to the taxable sales price. (Directive 12-4, Massachusetts Department of Revenue, July 16, 2012)

(06/12/2013)

A wind turbine used to provide electricity to a plant that produces semiconductor processing equipment is exempt from Massachusetts sales and use tax since it is machinery used directly and exclusively in furnishing power to an industrial manufacturing plant.  Sales of any materials, tools, fuels, and machinery that become part of the electricity-producing apparatus are also exempt from Massachusetts sales and use tax.  Sales of materials, tools, fuels and machinery that do not become part of the apparatus or that are consumed and used before the apparatus is actually generating and furnishing electricity to the plant are subject to tax. (Letter Ruling 12-7, Massachusetts Department of Revenue, July 2, 2012)

(06/03/2013)

Massachusetts Governor Deval Patrick and Amazon have announced that Amazon will begin collecting and remitting sales tax in Massachusetts, effective November 1, 2013. Amazon has indicated that it will work with the state toward enactment of federal legislation to resolve the sales tax issue. (Press Release, Massachusetts Office of the Governor, December 11, 2012)

(06/03/2013)

Freight insurance fees that a supplier charged to customers in connection with goods sold are included in gross receipts subject to Massachusetts sales tax. The supplier uses the proceeds from the freight insurance charges to pay for goods that are damaged or lost during shipment to customers. A freight insurance charge is not an excludable transportation charge because it is not a charge for preparing or moving goods from the vendor to the customer.  As a result, it is subject to Massachusetts sales tax when associated with a taxable purchase. (LetterRuling 13-4, Massachusetts Department of Revenue, March 27, 2013)

(04/29/2013)

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