Massachusetts Repeals Controversial Software Services And Computer System Design Tax


Massachusetts Tax Alert

This summer we alerted you that Massachusetts had broadened its sales tax to apply to certain computer and software services.  The so-called “tech tax” generated substantial criticism, particularly from technology companies that warned it would stifle innovation and cost jobs.  Governor Patrick and the Legislature heard that criticism and have repealed the bill retroactive to July 31, its effective date. 

The repeal bill provides that any tax paid must be refunded.  If a vendor has collected but not remitted the tax, it must make reasonable efforts to return it to the retail customer from whom the tax was collected.  If a vendor has remitted the tax and filed returns, it must file an abatement application by December 31, 2013.  This deadline represents a special and very short statute of limitations.  No refund will be paid until the vendor establishes that the tax has been repaid or credited to the retail customer.  In the case of vendors that have filed returns, but not remitted tax, reasonable efforts must be made to return the tax to the retail customers and an abatement application must be filed. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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