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A company’s sales of web-based services to physicians to help with management of records, billing, and communications are not subject to Massachusetts sales and use tax. The services are facilitated by software, but the object of the transaction is not the right to use the software. Rather, the object of the transaction is the purchase of information services performed by the seller, database access, and data processing. The services involve the seller’s employees performing a number of tasks such as calling, faxing, emailing, and data entry. This supports the determination that the transaction is a nontaxable sale of services. Physicians and their staff purchasing the services do access the software to a certain extent, but the incidental access and data entry is deemed inconsequential when applying the object of the transaction test so long as it can be shown that substantial services are performed by the seller and the value of those services outweighs the value attributable to the use of the software by the customer. (Letter Ruling 12-5, Massachusetts Department of Revenue, May 7, 2012)

(06/22/2012)

A retailer with stores in Massachusetts was not entitled to reimbursement of Massachusetts sales tax paid on uncollectible credit card sales because the sales tax was paid by the credit card issuing bank. The uncollectible purchases were made on credit cards issued by the bank in agreement with the retailer. The bank paid the retailer the full sales price, including sales tax, of the transactions. The retailer sought reimbursement of the sales tax paid under the Bad Debt Statute. However, the taxpayer never took a bad debt deduction on its federal return. The bank did but it did not attempt to recover the uncollected amounts from the taxpayer. The statute is intended to reimburse vendors who finance unrecovered sales tax. In this case, the bank financed the sales tax, and the retailer merely remitted sales tax it received from the bank. While the statute does not explicitly condition relief on a vendor advancing credit, the common-sense interpretation is that it is the vendor who must extend credit, because the vendor is the only identified “actor” in the statute. Because the bank itself extended the credit, the retailer is not entitled to the reimbursement of sales tax under the statute. (Sears, Roebuck & Co. v. Commissioner of Revenue, Massachusetts Appellate Tax Board, Nos. C293755, C294129, C299055, C305010, C293636, C298514, C298936, C305046, January 11, 2012)

(05/21/2012)

Massachusetts has introduced legislation that would conform its laws to the Streamlined Sales and Use Tax (SST) Agreement. The legislation would be effective on the first day of the twelfth month following passage. As of April 7, 2011, the bill was heard in the Joint Committee on Revenue and is eligible for the Executive Session. (H.B. 1695, as introduced in the Massachusetts House of Representatives on January 19, 2011)

(04/13/2011)

Massachusetts Gov. Deval Patrick has signed a bill that provides for a sales tax holiday effective August 14 and August 15, 2010. Many non-business retail items with a selling price of $2500 or less are exempt from sales and use tax. Non-qualifying items include motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products and items with a selling price exceeding $2500. When the price of a single item exceeds $2500, sales or use tax is due on the entire price charged, not on the excess amount over $2500. If multiple items are purchased at the same time, there is no limit on the amount of tax-free purchases an individual can make, so long as each item is less than $2500. Sales tax will not be charged on beer, wine and alcohol purchased for off-premise consumption during the tax holiday. The sales tax exemption applies to items bought for personal use only. Purchases by businesses and purchases by individuals for business use are still subject to tax. (Technical Information Release 10-10, Massachusetts Department of Revenue, August 5, 2010). (08/10)

(08/12/2010)

The Massachusetts Department of Revenue has established a two-month amnesty program for business taxpayers with existing tax liabilities. The program will run from April 1, 2010 to June 1, 2010 and will apply to tax years or periods ending on or before December 31, 2009. The program is limited to taxpayers with many existing business liabilities, including sales/use tax, sales tax on telecommunications services, meals tax, withholding income, room occupancy excise, gasoline excise, special fuels excise, and boat/recreational vehicles sales tax. See Technical Information Release for full list. Penalties will be waived for eligible taxpayers who pay the full outstanding balance and interest due. Any taxpayer who is eligible for the amnesty program, but fails to come forward before June 30, 2010 will, in addition to all other penalties, be subject to an additional penalty of $500. (Technical Information Release 10-5, Massachusetts Department of Revenue, March 12, 2010).

(04/22/2010)

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