Massachusetts Addresses Changes in Room Rental Taxation

As a result of a recent court decision, the Massachusetts Department of Revenue has revisited their position on the taxation of room rentals. Previously, if the term of a room rental exceeded 90 days, the first 90 days were subject to tax. The court found that room rentals that exceeded 90 days did not qualify as “occupancy” under existing tax law and should not be subject to tax. Going forward, if there is evidence in writing that the rental will exceed 90 days, no tax is due on the agreement. If the agreement is terminated before the 90 day period, tax is due retroactively. If there is no agreement on length, tax must be collected. Taxpayers who previously collected and remitted this tax may file an application for abatement. (Technical Information Release 07-2, Massachusetts Department of Revenue, January 26, 2007)

Posted on February 13, 2007