Director of the Municipal Databank
A review of revenues for this new local option shows that the first month of collections, or October alone, totaled $2,774,514. A preliminary review of revenues in November shows an additional $2.6 million collected.
Of the communities who initially adopted the local option meals excise, the City of Boston is the largest by population (and likely by relevant dining establishments). Of the approximately $2.7 million collected in October, $1,493,154.22 million came from and went back to Boston. The City of Cambridge had the second highest meals revenue collections in October with $256,811.97.
Worcester, our second largest city by population, came in with the third highest collections ($152,737.62) in October and the City of Springfield followed in fourth ($113,323.74). Of the 30 initial communities, the small, western Massachusetts Town of Sunderland collected the least at $2,640.08. That said, even in small communities, collections may amount to noteworthy new monthly revenue. Cities like Taunton, Northampton, and Somerville ranged from $42,138.59 to $45,874.59 to $60,854.69.
The new local option excise of .75 percent on the sale of restaurant meals originating within the municipality was created within the FY2010 state budget. To implement the new local option excise the municipality must accept MGL Ch 64L, section 2(a) by a majority vote of the local legislative body, subject to local charter.
For the local option excise to be effective October 1 a municipality needed to vote to accept the local option by August 31. As mentioned above, 30 municipalities accepted by the August 31 deadline and they received their first distribution on December 31. The December distribution was based on revenues generated on the sale of restaurant meals in October and reported to the Department of Revenue in November.
The next deadline for accepting the local option excise was December 1 with an effective date of January 1. Thirty-six municipalities adopted the local option to become effective January 1. These 36 municipalities will receive their first distribution on March 31 based on revenue generated in January and reported to the Department in February.
To date, four additional municipalities have accepted the local option, three with effective dates of April 1 and one effective July 1 bringing the total to 70 municipalities (or approximately 20 percent of cities and towns) within the local options' first six months.
For a complete list of communities that have adopted the local option meals excise please click here . On the Databank's local option page, you can also find DOR's estimates for what each community might raise if they chose to implement the new excise; to do so, please click here . And for those of you wondering what each community who has thus far adopted the local option raised, and received in December's disbursement, please click here . Please remember the December disbursement represents revenue that was collected in October and reported in November.
When a municipality votes to impose the local option excise on the sale of restaurant meals it is required to notify the Division of Local Services within 48 hours of the acceptance using the notification of acceptance form located at: http://www.mass.gov/Ador/docs/dls/mdmstuf/LocalOptions/mealsadopt.doc . The notification of acceptance should include the name of the local licensing authority.
The local licensing authority will coordinate with other local departments, such as the Board of Health to review and verify a list of businesses registered in the Department of Revenues' tax system as establishments serving meals in the adopting municipality. The municipality should update this list as necessary. Any discrepancies or updates will be reviewed by the DOR Audit Division. When necessary they will update the DOR tax system and approximately fifteen days prior to the effective date of the rate change notifications are sent to the taxpayers informing them of the new tax rate on the sale of meals.
Municipalities planning on adopting the local option excise on meals or that have general questions regarding this excise should contact the Division of Local Services' Municipal Databank at 617-626-2386.
Editor's Correction: An earlier version of this article was posted with incorrect information in the first paragraph. The originally posted article stated, in the final clause of the first paragraph, that November's revenues would, "be shared among the 66 communities who had adopted the local excise in time for a disbursement later this month." However, only those first 30 communities who adopted the excise by August 31 are eligible for any disbursements at this time. The 36 communities who adopted the excise on or before Dec 1 will be eligible to collect January revenues beginning March 31. This error was due to a change by the editor and not the fault of the author.