The purpose of this Technical Information Release (TIR) is to explain the effect of the Massachusetts Legislature's repeal of the sales tax on certain services. In July, 1990, the Legislature extended the sales tax to the sales of utilities, telecommunications services, and certain other services under G.L. c. 64H and c. 64I by St. 1990, c. 121, amended by c. 150. The tax on the sale of gas, steam, electricity, heating fuels, and telecommunications services became effective September 1, 1990, and remains in effect. The tax on certain other services, originally intended to become effective December 1, 1990, was postponed until March 6, 1991 by St. 1990, c. 265, and on March 8, 1991 was repealed, retroactive to March 6, 1991, by St. 1991, c. 4.
Public Written Statements
During the months immediately following the enactment of the service tax law, the Massachusetts Department of Revenue drafted and released a number of public written statements explaining the Massachusetts sales tax on services. In that period, the Department promulgated eleven regulations related to the sales tax on services. Seven of those regulations dealt with issues exclusively related to the sales tax on services. Those regulations are no longer applicable for Massachusetts sales tax purposes, and are listed as follows:
830 CMR 64H.1.6: Taxable and Nontaxable Services
830 CMR 64H.1.8: Mixed Taxable/Nontaxable Services
830 CMR 64H.2A.1: Vendors' Election to Treat Sales of Taxable Services as Occurring When Payment is Received
830 CMR 64H.2A.2: Mixed Service/Property Transactions
830 CMR 64H.6.8: Allocation and Apportionment of the Use of Services
830 CMR 64H.6.9: Services That Are an Integral, Inseparable, and Component Part of Services to Be Sold
830 CMR 64H.6.10: Professional Services
The remaining five regulations, listed below, although prompted the services tax legislation, also relate to the sales tax on tangible personal property, including utilities and to the sale of telecommunications services. These regulations are still applicable despite the repeal of most of the service tax law.
830 CMR 62C.16.3: Use Tax Returns and Payments
Promulgation Date: 3/15/91|
830 CMR 64H.1.6: Telecommunications Services
Promulgation Date: 6/7/91
830 CMR 64H.8.1: Resale and Exempt Use Certificates
Promulgation Date: 6/7/91
830 CMR 64H.1.7: Purchaser of Services (Emergency)
Promulgation Date: 3/6/91, extended 5/24/91
830 CMR 64H.6.11: Qualifying Small Business Exemption (Emergency)Promulgation Dates: 11/30/90; extended 2/28/91 and 5/24/91
Also, the following additional public written statements, all of which were issued in conjunction with the 1990 services tax legislation, are still applicable for sales tax purposes:
TIR 90-7: Taxation of Sales and Use of Gas, Steam, Electricity and Heating Fuel
TIR 90-8: Taxation of Sales and Use of Telecommunication Services
TIR 90-9: Massachusetts Sales and Use Taxation of Purchases of Production Related Tangible Personal Property by Broadcasters and Newspaper Publishers
TIR 91-1: Resale of Telecommunication Services
Fact Sheet 90-9: Massachusetts Sales and Use Tax on Heating Fuels
(Fact Sheets 90-1 through 90-8 are obsolete)
For those vendors who collected sales tax on certain services before the sales tax on those services was repealed, the following rules apply. A vendor who has collected sales tax on services must make a reasonable, good faith effort to return the sales tax to the purchaser of services who paid the tax. If it is not possible to return the tax to the purchaser who paid the tax, the vendor must hold such tax collected in a separate escrow account. If the tax is not reclaimed within five years, the money may be deemed to be abandoned property under G.L. c. 200A, § 9, and may revert to the Commonwealth. For further information, call the toll free number at the Department of Revenue, 1-800-228-0678 or (617)727-4490.
Commissioner of Revenue
June 28, 1991
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