Massachusetts Enacts Provision for Accelerated Sales Tax Remittance

Massachusetts has joined the ranks of states that have provisions for accelerated remittance of sales tax.

What does this mean for online companies that sell into that state? Effective April 1, 2021, businesses that have collected and remitted more than $150,000 in sales tax in the preceding calendar year will be required to remit tax collections to Massachusetts through the 21st day of the month no later than the 25^th day of the same month. (This accelerated remittance timeline won’t apply to businesses with less than $150,000 in sales tax in the preceding calendar year.)

A 5% penalty of the amount of an underpayment will be imposed unless the underpayment is “due to a reasonable cause.” A penalty also won’t be imposed if the payment made on or before the 25th day of the same month is not less than 70% of the total tax collected during the filing period.

Businesses that have collected and remitted more than $150,000 in Massachusetts sales tax (or room occupancy and meals tax) in the preceding calendar year in 2020 will want to put a system in place prior to April 2021 “to ensure they are able to timely file and remit,” the state warned.

Massachusetts joins such states as Minnesota, Ohio, Pennsylvania and Michigan with accelerated tax payment programs.

Why now in the Bay State? “The FY21 budget modernizes the timeline for sales tax remittance and collection, which has not been significantly updated in decades,” the office of Gov. Charlie Baker said.

As online sales continue to explode and states struggle with pandemic-wracked tax revenues, expect tax jurisdictions to adopt increased measures that will impact online businesses.

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