Massachusetts sets new due dates and filing requirements for sales and use tax

Massachusetts has changed the due date for sales and use tax returns and room occupancy excise tax returns. It also now requires certain vendors to make advance payments of sales and use tax and room occupancy excise tax.

Returns previously due 20 days after the close of the tax period will now be due 30 days after the close of the tax period. This applies to tax periods ending after April 1, 2021, and affects all tax returns filed for the following tax types:

• Marijuana retail taxes
• Meals tax
• Room occupancy tax
• Sales and use tax
• Sales tax on services

“30 days after the close of the filing period” often falls on the 30th day of the following month, but not always. It’s important to remember the due date is not the 30th of the month, but rather 30 days after the close of the reporting period.

The new due date doesn’t affect March 2021 monthly and quarterly returns; these are still due April 20, 2021. It does affect April 2021 monthly returns, which are due May 30, 2021.*

Exceptions

Because this is tax, there are exceptions. The due date for annual use tax returns for purchasers (Forms ST-10 or ST-11) will remain April 15. Additionally, sales and use tax returns filed by materialmen will continue to be due 50 days after the close of the tax period. If you’ve never heard of “materialmen,” this probably won’t impact you.

Due dates created to provide COVID-19 relief for businesses also won’t be affected by the new due date. 

See New Due Dates for Sales and Use Tax Returns for more details.

Starting April 1, 2021, for tax periods ending after April 1, 2021, certain Massachusetts taxpayers must make advance tax payments. This requirement applies to taxpayers with more than $150,000 in cumulative tax liability for the immediately preceding calendar year, with some exceptions. For example, a materialman isn't subject to the advance payment requirement.

As above, advance payments apply to the following tax returns:

• Marijuana retail taxes
• Meals tax
• Room occupancy tax
• Sales and use tax
• Sales tax on services

Advance payments are due on the 25th of the month, so the first advance payment is due on or before April 25, 2021. According to the Massachusetts Department of Revenue, the advance payment is for “tax collected,” which generally means “the tax on gross receipts, from the 1st through the 21st of that same monthly filing period.”

Advance filers don’t need to remit a tax return or voucher with the advance payment. Returns should be submitted along with the remaining tax 30 days after the close of the filing period.

For example, a taxpayer required to make an advance payment for April 2021 must:

• Remit the advance payment on or before April 25 (it will cover tax liability for April 1 through April 21)
• Remit the final payment and file the return on May 30, 2021* (for the period ending April 30, 2021)

Until further notice (i.e., until the department changes the tax returns), when filing the tax return for the reporting period, taxpayers should deduct the amount of the advance payment from the amount due and submit a payment for the difference.

Use tax, other taxes, and fees

Taxpayers making advance payments must continue to report and pay use tax when the return is filed (30 days after the end of the reporting period).

However, taxpayers liable for additional taxes or fees from the first 21 days of the month must include these in the advance payments. Applicable other taxes and fees include:

• Cape Cod and Islands Water Protection Fund Fee
• Community Impact Fee
• Convention Center Financing Fee
• Local option meals tax
• Marijuana excise tax
• Room occupancy excise tax

Penalties

A 5% penalty is imposed if the advance payment paid on the 25th is either less than the amount of advance payment due or less than 70% of the total liability reported for the filing period. The penalty will only be imposed on the amount of underpayment. See New Advance Payment Requirement for Vendors and Operators for more details. 

Visit avalara.com to learn how automating sales tax returns helps businesses of all sizes file the right return to the right place at the right time. 

*Taxpayers have until June 1, 2021, to file returns due May 30, 2021, because May 30 is a Sunday and May 31 is Memorial Day.