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Massachusetts won’t accelerate sales tax remittance, for now

  • Nov 7, 2017 | Gail Cole

 Massachusetts would have retailers accelerate sales tax remittance.

The Massachusetts Department of Revenue (DOR) has been studying the feasibility of implementing an accelerated sales tax remittance (ASTR) program by June 2018. However, according to its recently released Accelerated Sales Tax Feasibility Study, “The development and implementation of ASTR before June 1, 2018 within acceptable levels of cost and risk mitigation is not feasible.”

Why accelerate sales tax remittance?

In Massachusetts, as in other states, it can take up to 50 days or longer for collected sales taxes to be remitted to the DOR. The sooner that money reaches state coffers, the more the state stands to gain.

Since ASTR would close the window between collection and remittance, it could generate an estimated $125 million in additional one-time revenue for the state. It could also make it more difficult for people to illegally underreport and divert sales tax funds.

Why not accelerate remittance?

The Retailers Association of Massachusetts (RAM) strongly objects to “real time” sales tax collection. Since the legislature first tasked the DOR with determining the feasibility of ASTR, RAM has been working to show the department “that this is not a cost effective or workable solution.

RAM isn’t alone in voicing objections to accelerated remittance. In fact, most of the feedback from the retail industry was negative. According to the Council On State Taxation (COST), implementation “would impose staggering initial and recurring costs to businesses.” It estimated that impacted businesses would face “up-front costs of $1.22 billion and annual recurring expenses of $28 million.” The Associated Industries of Massachusetts adds acceleration could lead to “reduced economic growth/spending” in the Bay State.

Acceleration not totally abandoned

Despite industry concerns, the department hasn’t dismissed the possibility of ASTR. In fact, the feasibility study notes that “DOR did not identify any long-term logistical or technological barriers to implementing ASTR.” It estimates implementation could occur within three years and would cost the state approximately $4 million.

More information about the DOR’s Accelerated Sales Tax Feasibility Study is available here. To learn how tax automation software helps facilitate sales and use tax compliance in all states, check out Avalara.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.