- Claiming the Bad Debt Reimbursement
- Exempt Sales
- Payment of the Tax
- Sales/Use Tax on Telecommunications Abatements/Amended Returns
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts and Federal References
The Massachusetts 6.25 percent sales tax applies to the retail sale or use of telecommunications services in Massachusetts, by individuals or businesses, including small businesses. "Telecommunications services include telephone and other transmissions of information (such as beeper services, cellular telephone services and telegram services). Cable television and Internet access are exempt from the sales tax. Generally, the tax on the sale or use of telecommunications services is a tax on the transmission of messages or information by various electronic means, but not on the sale or use of information itself.
Taxable telecommunications services include, but are not limited to, the following:
- Telephone services (both voice and non-voice);
- Per minute or other separately stated charges for long distance telephone calls, whether or not the call is routed through the Internet;
- Telegraph services;
- Beeper, paging, and similar services;
- Voice mail services;
- Facsimile transmission services;
- Teleconferencing services;
- Auxiliary services such as call-forwarding and call-waiting services;
- Cellular telephone service including roaming charges;
- Charges for the right to use any telecommunications service, whether or not the purchaser ultimately uses the service in a particular billing period. Such charges include, but are not limited to, fees structured as recurring monthly charges for telephone service, set-up or activation charges, access charges, and membership fees.
In order to register, complete our online registration accessible from our MassTaxConnect home page. See DOR's E-file and Payment Requirements section to learn more about what entities are required to file and pay taxes electronically.
Claiming the Bad Debt Reimbursement
Massachusetts sales tax vendors who have remitted sales tax to DOR on accounts that are later determined to be worthless may file a claim for reimbursement with DOR. An account is determined to be worthless when it is written off as uncollectible for federal income tax purposes.
Reimbursements are paid annually without interest and may only be claimed on Form ST-BDR (or Form ST-BDR-Meals ), Claim for Bad Debt Reimbursement. A claim for a vendor's prior fiscal year must be filed on or before the due date, including extensions, of the vendor's federal income tax return (or annual federal filing in the case of an exempt organization) for the prior fiscal year.
Vendors Are Not Allowed to Subtract Bad Debts from Gross Receipts:
Vendors must include in gross receipts for their Sales/Use Tax Returns, Sales Tax on Meals Returns and Sales/Use Tax on Telecommunications Services Returns all sales for the period in which the sales occur, regardless of whether payment has been received.
Any vendor who recovers, in whole or in part, a bad debt for which a reimbursement has been received must include the recovered amount in the gross receipts amount of the appropriate sales tax return covering the period in which the recovery occurs.
Documentation to Submit with Completed Form ST-BDR:
- if the federal income tax return is on extension, attach a copy of the appropriate federal application for extension form;
- document each worthless sale and provide an explanation listing the date the sale occurred, the amount of the sale, the buyer's federal identification number, (if available), and all facts pertinent to the determination that the account is worthless. vendors who are unable to separately document the portion of each worthless account which represents taxable Massachusetts sales may calculate the reimbursement on an aggregated basis. [TIR 92-2]
Note: If filing for Sales/Use Tax, as well as Sales Tax on Meals, complete two separate Forms (use the current period form only.)
Non-taxable and exempt services include, but are not limited to, the following:
- Internet access services:
Internet access services, electronic mail services, electronic bulletin board services (including interactive services such as "chat rooms") or web hosting services transmitted or accessed through an Internet Service Provider.
- Private telecommunications networks:
Charges for access to or use of private telecommunications networks which are linked with the Internet or provide enhanced telecommunications services (e.g., charges for automated teller machine (ATM) terminal driving services, electronic funds transfer services, or credit card or check verification services).
- Database access:
Database or similar electronic information services available to multiple subscribers (e.g., services providing access to current stock market quotes, crop prices, or legal opinions and statutes.)
- Data processing services.
See 830 CMR 64H.1.3 (9).
- Residential service:
An exemption of $30 per month is applicable to certain residential telephone services. Only one $30 exemption may be claimed per month by a residential customer at a service address. Residential telephone service generally includes service provided to an individual for personal use at his or her residential address, including an individual dwelling unit such as an apartment. In the case of institutions where individuals reside, such as schools or nursing homes, telephone service is considered residential if it is provided to and paid for by an individual resident rather than by the institution. Telephone service provided to a business is not residential service even if the business is located in an individual's home. If an otherwise residential telephone is used for business purposes, the business must file a and pay tax on the service that is used. Residential users are not required to present exemption certificates. See M.G.L. c. 64H s. 6(i) below.
- Cable television service:
Charges for the transmission of video programming to retail customers through a community antenna television system regulated under Chapter 166A of the General Laws or charges for substantially similar services, including retail sales of direct broadcast television, are not telecommunications services subject to tax. Provision of telephone, messaging, or other non-programming services over cables or other facilities that also carry cable television programming is not "cable television" for purposes of Chapters 64H, Section 1, and 64I, Section 1.
- Public broadcasts of radio or television programming:
See 830 CMR 64H.1.6(2)
- Alarm monitoring services:
- Sales or uses of telecommunications services which are otherwise exempt:
e.g., sales to government agencies or charitable organizations. See G.L. c. 64H, s. 6, and 64I, s. 7 below
Payment of the Tax
Vendors must complete and remit the appropriate sales and use tax on telecommunications services return(s) to DOR, with payment in full, on or before the due date.
Filing Frequency And Payment Requirements:
Different schedules must be followed for filing and paying sales/use tax on telecommunications services depending on the amount of tax vendors collect from their customers in a year. Filing and payment requirements based on annual collections:
- $101 to $1,200: Payment and return are due quarterly by the 20 th day of the month following the calendar quarter, or
- $1,201 or more: Payment and return are due monthly by the 20 th day of the following month.
Return Filing Methods:
MassTaxConnect, or Form STS.
Electronically (ACH Credit or ACH Debit) or by check.
Electronic filing and payment requirements
Please see Business Options: Electronic Filing and Payment Programs for more information on the various electronic payment and filing options.
Vendor, Not Purchaser, May Apply for an Abatement:
Massachusetts requires vendors to collect the sales/use tax, sales tax on meals and/or sales tax on telecommunications services. Because the vendor, and not the purchaser, actually pays over the tax to the Commonwealth, only the vendor is authorized to apply for an abatement of the tax. A purchaser may request a credit or refund from the vendor who should then file an abatement claim.
- copies of all invoices related to the Application for Abatement;
- copies of credit memos, or proof of refund/credit to customer;
- copies of the appropriate Exemption Certificate(s):
Note: For United States and Commonwealth Of Massachusetts Government entities who do not present Form ST-5, Sales Tax Exempt Purchaser Certificate, a copy of the Government check or credit card sales receipt must be provided. [AP 101]
- 830 CMR 64H.1.6 Telecommunications Services
- TIR 09-11, Change in Rate, Scope, and Computation of Sales/Use Taxes
- TIR 04-30 Revised Electronic Filing Requirements
- TIR 03-11: Expansion of Mandatory Electronic Filing
- 830 CMR 64H.1.3 (9): Computer Industry Services and Products
- M.G.L. Chapter 64H, Sections 1; 6(i)
- M.G.L. Chapter 64I, Sections 1; 7
- I.R.C. § 166
Bad Debt Reimbursement
- M.G.L., Chapter 64H, Section 33 as amended by St. 1998, c. 485, ss. 20, 23
- TIR 00-3: Claiming the Bad Debt Reimbursement
- TIR 92-2: Claiming the Bad Debt Reimbursement
The language concerning due dates and the period covered by a claim was amended effective January 1, 1999. Since TIR 92-2 was issued on March 27, 1992, it does not reflect this change.
- I.R.C. § 166