Accelerated Sales Tax Collections Very Likely in Massachusetts

Date: November 18, 2020

Both Governor Charlie Baker and the Massachusetts House have included provisions in their versions of the FY2021 state budget to change the way the state sales, meals and room occupancy tax are collected. The Massachusetts Senate is also considering a similar proposal this week to adopt the accelerated or “prepayment” plan.

In short, this simply speeds up the amount of revenue collected by one month as businesses submit a portion of the sales tax a few weeks earlier than usual. It appears the new policy will require those businesses that collect at least $150,000 in annual sales, meals or room occupancy taxes, to calculate the taxes collected in the first 21 days of a month and make that payment within fours days. Previously, those businesses were required to make the payment by the 20th day of the following month.

The original plan by Governor Baker was modified significantly by the Massachusetts House, including the removal of costly real-time sales tax collections for all businesses by 2024 (no matter the collected tax amount). As this process is still being debated by the Massachusetts Senate this week, we will keep you updated on any changes in the final version of this policy.


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