Election To File and Pay Sales and Use Tax as a Materialman – As written in section B of:
TIR 06-16: Effect of Recent Economic Incentive Legislation on the Personal Income Tax, the Corporate Excise, and Tax Administration )
Effective July 1, 2007, the Act amends c. 62C, § 16(h) to provide new filing requirements for a materialman who makes sales taxable under the sales or use tax. Under the new law, a taxpayer that has requested materialman status and has received approval from the Department of Revenue must file a return on a monthly basis within 50 days after the expiration of the month covered by the return. Thus, a taxpayer that qualifies as a materialman must file a sales and use tax return and pay the tax due for each monthly period on or before the twentieth day of the second month following the tax period. St. 2006, c. 123, §§ 53, 54, and 55.
The Act amends c. 62C, § 1 to insert the following definitions:
"Materialman," a person primarily engaged in the retail sale of building material, tools and equipment to building contractors for the improvement of real property and authorized by law to file a mechanics lien upon real property for improvements related to the property. For the purposes of this definition, 'primarily engaged' shall mean sales of 50 per cent or more of total sales to building contractors.
"Building contractor," any general contractor, subcontractor or repairman who is engaged in the business of constructing or improving real property.
A person authorized by law to file a mechanics lien upon real property for improvements related to the property is a person who meets the requirements of the mechanics lien statute at G.L. c. 254, § 4.
On-line Application. A taxpayer seeking Department of Revenue approval to file and remit sales and use tax as a materialman must file an on-line application through MassTaxConnect and certify that, in any two of the last four calendar quarters, (1) such person was engaged in the retail sale of building material, tools and equipment to building contractors for the improvement of real property, (2) such person's retail sales of building material, tools and equipment to building contractors for the improvement of real property constituted 50 percent or more of its total sales, and (3) such person is authorized under G.L. c. 254, § 4 to file a mechanic's lien upon real property for improvements related to the property. The Department anticipates that the on-line application for materialman filing status will be available by June 15, 2007.
Materialman filing status will remain in effect until the taxpayer notifies the Department that it no longer qualifies to file as a materialman or the Audit Division determines that the taxpayer no longer qualifies for that status.
Mandatory Electronic Filing and Payment. A taxpayer that has been approved for materialman filing status is subject to the Department's Electronic Filing Requirements. A materialman must electronically file a Materialman Sales and Use Tax Return on a monthly basis using the "ACH Debit" payment method to remit sales and use tax due. See TIR 05-22 and TIR 04-30.
Example. For the period July 1, 2007, through July 31, 2007, a qualifying materialman must file a sales and use tax return and pay the tax due on or before September 20, 2007. For the subsequent month of August 2007, the materialman must file sales and use tax return and pay the tax due on or before October 20, 2007.