Advance Payment Requirements

Beginning April 2021, taxpayers who have more than $150,000 in total liability for certain tax types from the previous year are required to make an advance payment before the related tax return is due.

Updated: January 27, 2022

Table of Contents

Tax Types

The advance payment requirement applies to monthly tax returns filed for the following:

  • Sales and Use Tax
  • Sales and Use Tax for Marketplace Facilitators
  • Sales Tax on Meals
  • Sales Tax on Telecommunications
  • Room Occupancy Excise Tax
  • Marijuana Retail Taxes.

Threshold for Making an Advance Payment

  • The threshold is determined annually.
  • Taxpayers are subject to the advance payment requirement if they meet the threshold of more than $150,000 in cumulative tax liability for the previous calendar year (i.e., January 1 through December 31).
  • The line items used to determine the advance payment amount are also used to determine whether the threshold is met.
  • Where a taxpayer is required to report sales tax on multiple returns (e.g., sales tax on goods and sales tax on meals) the threshold will be applied separately for each return type.
  • All returns for the same tax type filed by a vendor will be combined.
  • Once the $150,000 threshold is exceeded, all taxes and fees reported on the return (other than use tax on purchases) are subject to the advance payment requirement.
  • Use tax on purchases is not included in the calculation of the threshold or the advance payment.
  • A tobacco retailer may subtract the total amount of prepaid tax that was paid in the previous year when calculating the threshold.

Line Items Used to Calculate Payment

 

Account (Tax Type)

Form

LINE ITEMS TO BE USED IN DETERMINING ADVANCE PAYMENT REQUIREMENT

Marijuana retailers 

MRT

Total Amount Due (line 7); (sum of lines 4, 5 and 6)

Sales Tax

ST-9

Total sales tax (line 7)

Sales Tax (Marketplace Facilitators)

ST-9 (online)

Direct Total Sales Tax (line 7a) plus Total Sales – Facilitated (line 7b)

Sales tax on Telecom

STS

Multiply line 3 by rate (6.25%)

Sales tax on Meals

ST-MAB-4

State tax due (line 6) plus Local tax due (line 7)

Room Occupancy Consolidated

ROC

Total Tax (line 9); (sum of lines 3-8)

Advance Payments Requirements

  • The advance payment required is the liability that must be reported on the line items identified above. It may be based on either (1) the portion of the tax liability from the 1st of the month through the 21st of the month or (2) at least 80% of the prior month's total liability.
  • The payment must be paid on or before the 25th of the month.
  • A tobacco retailer may subtract the total amount of prepaid tax that was paid from the 1st through the 21st of that same monthly filing period for the advance payment.
  • Where a tobacco retailer is basing its advance payment on 80% of the prior month's total liability, it may subtract the total prepaid tax that was claimed on the prior month's return for purposes of calculating the advance payment.
  • A materialman is not subject to the advance payment requirement. However, a materialman must register through MassTaxConnect as a materialman to be exempt from the advance payment requirement. 

Penalties and Self-Assessment Worksheet

A 5% penalty is imposed only if the advance payment paid on the 25th is:

  1. less than the amount of the advance payment due or 
  2. less than 70% of the total tax liability reported for the filing period.

The penalty is only imposed on the amount of underpayment.

Beginning with the January 1, 2022 return, you will be able to self-assess an advance payment penalty when the amount paid by the 25th is less than the tax liability from the 1st through the 21st or at least 80% of the prior month's liability. To determine if you are subject to the underpayment penalty and to calculate the amount of the penalty, you may use the Self-Assessed Advance Payment Penalty Worksheet

Payment Due Dates for Monthly Filers

Tax liability in prior year

Threshold for advance payment requirement

Payment due

$150,000 or less

If a vendor or operator’s cumulative tax liability was equal to or below $150,000 in the immediately preceding calendar year, no prepayment is required on the 25th.

No advance payment required on 25th of month.

Full payment due with return on 30th day after end of monthly filing period.

More than $150,000

If the vendor or operator’s cumulative tax liability was more than $150,000 in the immediately preceding calendar year, payment is required on the 25th.

Advance payment of tax collected through and including 21st day of month due on 25th of monthly filing period or at least 80% of the prior month's total liability.

Payment of remaining amount due with return on 30th day after end of monthly filing period.

Making a Payment with MassTaxConnect

Taxpayers can make their advance payments with MassTaxConnect. For more information, see “How will I make my advance payment on MassTaxConnect?” in the Frequently Asked Questions section and the video tutorial How to Make an Advance Payment on MassTaxConnect.

Frequently Asked Questions

Is a return or voucher required to be filed with the advance payment? (Updated 12/17/21)

No. The advance payment will be a “return payment” made on the appropriate monthly tax period. No return or voucher is required at the time the advance payment is submitted. 
 

How will I make my advance payment on MassTaxConnect?
 

All taxpayers may use ACH debit to make their advance payments with MassTaxConnect. After login:        

  • Locate the account type and select the Returns hyperlink. 
  • Select the Period you want. 
  • Select the Make a Payment hyperlink
  • Select Return Payment in the payment type dropdown

For more FAQs visit Advance Payment Frequently Asked Questions. 

Video Tutorial: How to Make an Advance Payment on MassTaxConnect

Contact

Phone

Tax Department (617) 887-6367
Toll-free in Massachusetts (800) 392-6089

9 a.m.–4 p.m., Monday through Friday

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