Tax on Massachusetts IT Services, Computer and Software Services
In light of public statements of support for repeal of the new tax provisions by the Governor, the Senate President, and the Speaker of the House; the Commissioner, under her authority in Chapter 62C, announces an EXTENSION of the FIRST DUE DATE for the reporting and payment of sales and use taxes with respect to these services relating to Boston IT Services computer system design and to modification, integration, enhancement, installation, or configuration of standardized or prewritten software. Pursuant to this extension, reporting and payment of these particular taxes that cover the period July 31, 2013 – September 30, 2013 should be reflected on the September return due on October 20, 2013. This extension is designed to minimize administrative burden on vendors during a period when the Legislature is likely to be considering repeal of these new tax provisions.
ORIGINALLY TIR 13-10 had announced provisions in An Act Relative to Transportation Finance, St. 2013, c. 46, which amended Chapters 64H and 64I of the General Laws to apply the sales and use tax to certain services relating to computer system design and to modification, integration, enhancement, installation, or configuration of standardized or prewritten software. St. 2013, c. 46, §§ 48, 49, 89. The changes were effective July 31, 2013. TIR 13-10 further provided that for the convenience of taxpayers and to facilitate administration, transactions for July 31, 2013 should be reported and paid together with August 2013 transactions by the September 20, 2013 due date for August 2013 transactions.
Caution: This filing extension does not apply to returns and payments with respect to any other sales or use taxes that are unaffected by the recent law changes referred to above. Sales and use taxes remain fully due and payable on tangible personal property, which is defined to include transfers of the use or access to standardized or prewritten software (whether such software or the use thereof is transferred in tangible form, electronically, or in any other manner). Sales and use taxes also remain fully due and payable on taxable telecommunications services. Those returns for sales and use during August are generally due on September 20, 2013 and that filing date is unchanged.
If the provisions of St. 2013, c. 46, imposing tax on certain software services are repealed, the Department anticipates issuing further guidance regarding (a) the requirement of vendor refunds to customers of any tax collected from customers and (b) applications for abatement on any tax remitted to DOR by vendors pursuant to the repealed provisions.