Walter & Shuffain, P.C.
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On June 29, Governor Patrick signed into law an increase in the Massachusetts state sales and use tax, including increases to hotel and meals taxes. Over the course of a year, the new rate will cost you an additional $125 for every $10,000 of taxable purchases.
The increased tax rate goes into effect August 1, 2009. Individuals and businesses that are considering making large dollar value purchases of taxable items during the next several months may want to accelerate their purchasing timetable in order to avoid the increase in tax. As always, the cost of money to accelerate purchases should be compared to the cost of the increased sales tax when making this evaluation.
Consumers will notice increases to monthly bills such as telephone, cable, cellphone and satellite services. In addition, businesses bidding on future work may need to immediately factor this increased cost into their proposals.
The following is a brief summary of the law changes most likely to effect you:
Effective August 1, 2009, the sales and use tax rate is increased from 5% to 6.25%. For sales of gas, steam, electricity or telecommunications services, billed on a recurring basis, the rate increase applies as of the first billing period starting on or after the effective date.
Massachusetts imposes a room occupancy excise tax of 5.7 percent on rooms rented for $15 or more per day, and allows cities and towns the option of levying an additional local occupancy tax.
Effective August 1, 2009, cities and towns are authorized to impose local hotel occupancy taxes at rates of up to 6% (previously, 4%). The maximum rate in Boston is 6.5% (previously, 4.5%).
Effective October 1, 2009, cities and towns are authorized to impose a 0.75% local meals tax on sales of restaurant meals. Sales that are exempt from sales tax are also exempt from any local meals tax. The tax must be collected and remitted to the Tax Commissioner at the same time and in the same manner as sales and use tax.
Effective August 1, 2009, alcoholic beverages sold at retail stores are subject to sales and use tax.
Effective August 1, 2009, the sales and use tax bracket schedule is replaced with a rounding rule. Tax must be computed to the third decimal place and rounded to the nearest whole cent, rounding up whenever the third decimal place is greater than 4. Sellers may elect to compute tax on an item or an invoice basis.
Effective August 1, 2009, an excise tax is imposed on the provision of direct broadcast satellite service in an amount equal to 5% of the direct broadcast satellite service provider's gross revenues derived from subscribers. The law requires the providers to collect this excise tax from its subscribers.
If you would like more detailed information, please do not hesitate to contact us.