Effective April 1, 2021, the Massachusetts Department of Revenue will require a new ‘advance payment’ tax remittance applicable to taxpayers with cumulative Massachusetts sales and use tax or excise tax remittances greater than $150,000 in the preceding calendar year. The sales and use tax return due date is also pushed back 10 days to the 30th of the month, beginning for the April tax period. 

Updated due date

The new sales and use tax return due date provides 10 additional days for taxpayers to file. Beginning for tax periods ending after April 1, 2021, the due date for sales and use tax returns is now the 30th of the month following the tax period (30 days after the close of the tax period). The updated due date replaces the commonwealth’s longstanding due date of the 20th day of the following month. Accordingly, the sales and use tax return for the April 2021 period will be due on May 30, 2021. 

Advance payment program

The advance payment program is applicable to sales and use taxpayers with a cumulative Massachusetts tax liability in the immediately preceding calendar year exceeding $150,000 (including marketplace facilitators and marijuana retailers). Beginning April 1, 2021, the program now requires impacted taxpayers to do the following:

Due by the 25th day of the filing period

• Impacted taxpayers must remit any sales tax collected through the 21st day of the month. For example, sales tax collected beginning on April 1, 2021 through the April 21, 2021 must be remitted by April 25, 2021. Use tax on purchases is not subject to the advanced payment requirement.
• If a qualifying taxpayer fails to remit the tax collected from the first 21 days in the month, and the underpayment exceeds 30% of the total tax due for the month, a penalty of 5% will be imposed.

Due by the 30th day of the month after the filing period

• Impacted taxpayers must (1) file a tax return for the period, and (2) remit any tax collected from the 22nd day of the month through the end of the month. For example, any tax collected between April 22 and April 30 (the remaining amount collected during the period) must be remitted by May 30. 

For additional details and examples, please see department guidance at the following links: New Advance Payment Requirement for Vendors and Operators or TIR 21-4: Tax Provisions in the Fiscal Year 2021 Budget. 

Takeaways

These changes resulted from emergency appropriations legislation, which added section 16B to chapter 62C of the General Laws, and amended subsections 16(g) and (h) of the same. Please note that these changes also apply to room occupancy excise remittance and reporting.

Taxpayers with a collection and reporting responsibility in Massachusetts should be aware that the updated due date is applicable to all taxpayers remitting Massachusetts sales and use tax. In regard to the advance payment program, taxpayers should evaluate the amount of tax remitted in the preceding calendar year to determine if they are subject to the new advance payment requirement. Taxpayers with questions about these changes and whether advanced payment is required should speak to their Massachusetts state and local tax advisers.