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Monthly filers of Massachusetts sales and use tax returns currently file their returns and remit tax on the 20th day of the month following the period of the sale. However, there is a change on the way for many companies in the Bay State.
Effective April 1, 2021, companies with tax liabilities that exceeded $150,000 in the prior calendar year must remit such taxes collected through the first three weeks of the month by the 25th day of that month. Tax collected during the remainder of the month will be due with the subsequent return, which will now be due by the 30th day of the month following the reporting period (rather than the 20th day).
As an example, sales tax collected in April for the first 21 days of the month will be due April 25. Sales tax collected in April for the last nine days of the month will be due by May 30. Generally, the legislation includes a 5% underpayment penalty, unless such penalty was due to reasonable cause. However, the penalty will not apply if the accelerated payment for the first three weeks is at least 70% of the aggregate tax collected during the reporting period.
Here's an illustrative example from the Massachusetts Department of Revenue’s draft information release:
Super Toys Inc., a retail vendor, has $500,000 in total gross receipts from taxable sales in the month of April. Super Toys has $255,992 in taxable sales from April 1, 2021 through and including April 21, 2021, and remits $16,000 on April 25, 2021 ($255,992 x 0.0625). Based on its total taxable sales for April, Super Toys’ total sales tax due for the filing period is $31,250 ($500,000 x 0.0625), and it must remit the remaining tax due of $15,250 with the return it files on or before May 30, 2021. Although Super Toys remitted less than 70% of the total tax due for the month (the safe harbor), there is no underpayment that is subject to the 5% underpayment penalty because it remitted the amount required to be remitted on April 25.
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