Technical Information Release

Technical Information Release  TIR 10-18: Electronic Filing Thresholds Modified

Date: 11/03/2010
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Tax Administration

I. Introduction

This Technical Information Release announces two new electronic filing requirements. One of the new requirements affects S corporations, and the other affects employers remitting wage withholding, operators remitting state and local room occupancy excise, and vendors remitting sales and use taxes. Any taxpayer previously required to file electronically under the electronic filing requirements of TIR 04-30 and 05-22 must still file electronically.

II. Modified Electronic Filing Requirement for S Corporations

S corporations with gross income totaling more than $100,000, including income taxed to the S corporation as well as the S corporation's shareholders' pro rata share items, must file any returns and pay any amount due electronically. For purposes of this electronic filing threshold, gross income includes gross receipts or sales (less cost of goods sold), gross income from rental real estate activity, other rental activity, interest income, dividend income, royalty income, net short-term and net long-term capital gain, net gain under IRC section 1231, and any other income.

Losses reported from the sale or exchange of business property, other losses reported on Schedule S, and losses reported on Schedule K should not be subtracted from income as described above for the purpose of calculating whether the electronic filing threshold has been met. S corporations over this threshold must make all payments and returns electronically as of January 1, 2011.

If the S corporation reports as part of a combined group pursuant to G.L. c. 63, § 32B with one or more other corporations, the S corporation must participate in electronic filing, as required under TIR 09-18.

III. Electronic Requirements for Wage Withholding, Room Occupancy, and Sales and Use Tax: Mandatory Electronic Filing Threshold Set at $5,000 in Aggregate Tax Liability

An employer remitting wage withholding under chapter 62B, an operator remitting state and local room occupancy excise under chapter 64G, and a vendor remitting sales and use taxes under chapters 64H and 64I, including sales taxes imposed on meals and telecommunications services, must file all returns and documents electronically and pay amounts due via electronic funds transfer for these taxes as of January 1, 2011 if the filer's combined liability for the three categories of taxes for the preceding calendar year was $5,000 or more. The use of a payroll processing service that E-files wage withholding returns does not obligate a taxpayer to file electronically unless the aggregate threshold is reached for that taxpayer. Any employer, operator, or vendor may voluntarily file electronically, even if the total annual amount remitted is below the E-file threshold. This threshold was most recently modified in TIR 04-30. Once a filing entity is required to file electronically in one year, the filing entity must E-file in all subsequent years, regardless of the amount due, for any of the three indicated categories of Massachusetts taxes for which it has a filing obligation.

/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue


November 3, 2010

TIR 10-18

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