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New Advance Payment Requirement for Vendors and Operators in G.L. c. 62C, § 16B

Beginning April 2021, a provision in the FY21 budget requires that some vendors and operators, depending on amount of tax or excise liability from previous year, make an advance payment before the related tax return is due. This requirement will begin for tax periods ending after April 1, 2021.

Updated: September 1, 2021

Table of Contents

New Advance Payment Requirement for Vendors and Operators in G.L. c. 62C, § 16B

 

Account (Tax Type)

Form

LINE ITEMS TO BE USED IN DETERMINING ADVANCE PAYMENT REQUIREMENT

Marijuana retailers (MTS)

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 8); (sum of lines 3-7)

 

THRESHOLD

  • Taxpayers are subject to the advance payment requirement if they meet the threshold of more than $150,000 in cumulative liability for the immediately preceding calendar year (Jan 1 through Dec 31). The line items used to determine the amount required to be paid in advance are also used in determining whether the threshold is met, except as noted below.
  • Whether the threshold is met should be determined on an annual basis.
  • Where a vendor 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 of the same type filed by a vendor will be aggregated.
  • Once the threshold is triggered, 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 cumulative amount of prepaid tax that was paid in the immediately preceding calendar year for purposes of calculating the threshold. The line items to be used would be line 7 minus line 11 on Form ST-9. For marketplace facilitators filing the online ST-9, it would be (line 7a plus line 7b) minus (line 11a plus 11b).

ADVANCE PAYMENT

  • The advance payment required is the portion of the liability reported on the line items identified above from the 1st of the month through and including the 21st of the month. It must be paid on or before the 25th of the month.
  • A tobacco retailer may subtract the amount of prepaid tax that was paid from the 1st through the 21st of that same monthly filing period for purposes of the advance payment.
  • A materialman is not subject to the advance payment requirement. A vendor that qualifies to file and pay sales/use tax as a materialman must register through MassTaxConnect as a materialman. Only vendors that have registered with DOR as a materialman are exempt from the advance pay requirement.  Contact us at (617) 887-6367 with any questions about materialman status.   

PENALTIES

  • The 5% penalty is imposed only if the advance payment paid on the 25th is (1) less than the amount of advance payment due or (2) less than 70% of the total liability reported for the filing period. The penalty will only be imposed on the amount of underpayment.

EFFECTIVE DATE

  • The advance payment requirement is applicable to periods ending after April 1, 2021 (i.e., starting with the April monthly returns the advance payment must be made on April 25th and the return must be filed by May 30, 2021).

Advance Payment and Return Filing and Payment 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.

 

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

 

 

Video: How to Make an Advance Payment on MassTaxConnect

Video: Accounting for Advance Payments When Filing or Paying

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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