This Technical Information Release (TIR) is being issued to provide for a temporary moratorium on collection of sales or use tax on the following telecommunication services: Internet access services, electronic mail services, electronic bulletin board services, web hosting services or similar online computer services. The moratorium is effective on August 7, 1997 and will expire on December 31, 1998, or at such earlier date upon which legislation is enacted exempting some or all of these services from the definition of telecommunications services contained in G.L. c. 64H, § 1.

During the moratorium, the Commissioner will not require telecommunications vendors to collect and remit tax in connection with the sale or use of the above services, and the Department of Revenue's Enforcement Division will suspend audit activity concerning sales or use tax on these services. The vendor's ultimate liability for sales or use tax will depend on the final action taken by the Legislature. Bills approved by both the Massachusetts House (H.B. 4608) and Senate (S.B. 1912) and currently in Conference Committee exempt the above services from tax retroactive to 1990. The Commissioner expects this legislation to pass shortly, when the Legislature returns from recess. However, should this or similar legislation not be enacted, the Department lacks authority to forgive tax on any telecommunications services for periods before, during, or after this temporary moratorium. The moratorium does not affect the obligation of telecommunications vendors to collect tax on telecommunications services other than the ones enumerated above or to pay sales or use tax on materials, equipment, or other tangible personal property or services not otherwise exempt.

The Commissioner may require as a condition of this moratorium an executed Consent Extending the Time for Assessment of Taxes from telecommunications vendors providing the above services.

No abatements for sales or use tax already collected with respect to Internet access and related telecommunications services will be granted by the Department until legislation is enacted. However, taxpayers wishing to file protective abatement claims during the moratorium may do so by filing Form CA-6, Application for Abatement. Taxpayers may wish to consider filing such claims for tax periods which, in the absence of legislation creating a retroactive exemption, would fall outside of the time periods for filing abatement claims provided by G.L. c. 62C, § 37. Generally, the telecommunications vendor rather than the individual customer would be the appropriate party to file for any abatement.

Mitchell Adams
Commissioner of Revenue


TIR 97-10

August 21, 1997