| Date: | 07/28/2009 |
|---|---|
| Organization: | Massachusetts Department of Revenue |
| Referenced Sources: | Massachusetts General Laws |
Sales and Use
I. Background
Recently enacted legislation establishes a 5% excise on the gross revenues of a provider from the sale of direct broadcast satellite service to a subscriber or customer in Massachusetts. The excise applies to actual receipts on or after August 1, 2009, with the adjustments described in Section III of this TIR. See G.L. c. 64M as added by St. 2009, c. 27, §§ 61, 150. The excise will be passed along to those subscribers or customers as a separately stated item on their bills. This TIR provides guidance concerning this new tax, including filing requirements for providers.
II. Definitions
"Direct broadcast satellite service" is defined as "the distribution or broadcasting by satellite of video programming or services directly to receiving equipment located at an end user subscriber's or an end user customer's premises, including, but not limited to, the provision of premium channels, the provision of music or other audio services or channels, and any other service received in connection with the provision of direct broadcast satellite service." The excise applies to satellite video programming services, including subscription fees for related services such as on-screen programming features and enhanced recording and playback abilities. The excise does not apply to satellite radio sold without video programming. Except as provided in Section III of this TIR, the entire revenues of a provider from satellite video programming services are subject to chapter 64M tax, regardless of whether the provider separately states a charge for one or more audio components of that service.
"Direct broadcast satellite service provider", is defined as "a person who transmits, broadcasts or otherwise provides direct broadcast satellite service to subscribers or customers in the Commonwealth."
"Subscriber or customer" is defined as "a member of the general public who receives direct broadcast satellite service from a direct broadcast satellite service provider and does not further distribute such service in the ordinary course of business."
See G.L. c. 64M, § 1, as added by St. 2009, c. 27, §§ 61.
III. Gross Revenues Subject to Tax
For purposes of the Chapter 64M excise, "gross revenues" are defined as all consideration of any kind or nature received by a direct broadcast satellite service provider, or an affiliate of such person, in connection with the provision of direct broadcast satellite service to subscribers or customers, including recurring monthly charges for direct broadcast satellite service and pay-per-view, video-on-demand and other event-based charges for direct broadcast satellite service; except as provided below, no deduction shall be taken for the costs incurred in providing direct broadcast satellite service, whether or not they are recovered from the customer, either directly or indirectly, including labor or service costs, interest charges or other expenses incurred by the provider. The following items are specifically excluded from gross revenues:
(1) Charges for the rental of equipment related to the provision of direct broadcast satellite service;
(2) Activation, installation, repair and maintenance charges or similar service charges related to the provision of direct broadcast satellite service;
(3) Service order charges, service termination charges or any other administrative charges related to the provision of direct broadcast satellite service;
(4) Revenue not actually received, regardless of whether it is billed, including, but not limited to, bad debts;
(5) Revenue received by an affiliate or other person in exchange for supplying goods and services used by a direct broadcast satellite service provider;
(6) Refunds, rebates or discounts made to subscribers or customers, to advertisers or to other persons;
(7) Revenue from service other than direct broadcast satellite service, including:
(A) telecommunications service as defined in 47 U.S.C. section 153(46);
(B) information service as defined in 47 U.S.C. section 153(20); or
(C) any other service that is not a direct broadcast satellite service;
(8) Revenue from any service that is subject to tax under chapter 64H or 64I;
(9) The tax imposed by this chapter or any other tax of general applicability imposed on a direct broadcast satellite service provider or a purchaser of direct broadcast satellite service, by a federal, state or local governmental entity and required to be collected by a person from customers and remitted to the taxing entity;
(10) Any foregone revenue from providing free or reduced-cost direct broadcast satellite service to any person, including employees of the direct broadcast satellite service provider or any governmental entity as required or authorized by federal, state or local law, except revenue foregone in exchange for the goods or services through a trade or barter arrangement;
(11) Revenue from the sale of capital assets or surplus equipment not used by the purchaser to receive direct broadcast satellite service from the direct broadcast satellite service provider;
(12) Reimbursements made by programmers to the direct broadcast satellite service provider for marketing costs incurred by the direct broadcast satellite service provider for the introduction of new programming that exceed the actual costs incurred by the direct broadcast satellite service provider;
(13) Late payment fees collected from subscribers or customers; or
(14) Charges other than those for direct broadcast satellite service (including any related services included in the definition of direct broadcast satellite service) and other than those charges specifically described in Subsections (1) - (13) of Section III of this TIR, that are aggregated or bundled with such specifically-described charges on a subscriber or customer's bill, if the direct broadcast satellite service provider can reasonably identify the charges in its books and records kept in the regular course of business.
See G.L. c. 64M, § 1, as added by St. 2009, c. 27, § 61.
Some charges excluded from direct broadcast provider's gross receipts for purposes of the chapter 64M tax may be subject to sales or use tax under chapters 64H or 64I, including but not limited to telecommunications services and equipment rental.
IV. Registration, Filing, and Payment Requirements
Every direct broadcast satellite service provider subject to tax under Chapter 64M must file monthly returns on or before the twentieth day of each calendar month. See G.L. c. 62C, § 16, as amended by St. 2009, c. 27, § 33. The returns for the months of August, September, October, November and December, 2009, must be filed on paper Form M-SSR, which will be available to download and print at www.mass.gov/dor. DOR will provide additional filing guidance for periods beginning January 1, 2010.
V. Exemptions
The sales and use tax exemptions contained in G.L. c. 64H, § 6, and G.L. c. 64I, §7, are not applicable to direct broadcast satellite service taxable under G.L. c. 64M, and providers may not accept sales tax exemption certificates for purchases of those services.
VI. Collection from Customer; Liability for Unpaid Tax
Each direct broadcast satellite service provider selling direct broadcast satellite service to subscribers or customers must collect from such subscriber or customer the full amount of the excise imposed with respect to gross revenues derived from or attributable to such customer or subscriber. The excise is a debt from the subscriber or customer to the direct broadcast satellite service provider when added to the subscriber or customer's invoice for video programming service and shall be recoverable at law in the same manner as other debts. See G.L. c. 64M, § 3, as added by St. 2009, c. 27, § 61.
A direct broadcast satellite service provider who fails to pay the excise imposed by Chapter 64M is personally and individually liable to the commonwealth. The term "direct broadcast satellite service provider", includes an officer or employee of a corporation or other business entity or a member or employee of a partnership who, as such officer, employee or member, is under a duty to pay over the taxes imposed by Chapter 64M. See G.L. c. 64M, § 5, as added by St. 2009, c. 27, § 61.
VII. Recordkeeping
Direct broadcast satellite service providers must maintain normal business records sufficient to determine whether the proper amount of tax has been paid, including a breakdown of any amounts excluded from gross revenues in accordance with Section III of this TIR. These records must be kept for the amount of time specified in the Record Retention Regulation, 830 CMR 62C.25.1, and must be produced for review by the Department in the course of an audit of the vendor.
/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue
NKB:ECL:wrd
July 28, 2009
TIR 09-14