(855) Marcum1 | FOLLOW US           
Marcum LLP
  • EVENTS
  • OFFICES
  • CAREERS
  • SUBSCRIBE  
  • 中文
Marcum LLP
Insights

Tax Flash

 

In This Edition

New in Massachusetts: Repeal of the Computer and Software Services Tax

Contributor: Paul Graney, Partner, Tax & Business
Diane Giordano, Partner, Tax & Business
Ronald Finkelstein, Partner, Tax & Business
Ali Hirji, Supervisor, Tax & Business

Share:

Massachusetts recently passed, An Act Repealing the Computer and Software Services Tax (TIR 13-10), which retroactively repeals changes the sales and use tax laws applied to certain services relating to computer system design and modification, integration, enhancement, installation, or configuration of standardized or prewritten software. Those changes were to be effective July 31, 2013 and have now been repealed retroactively to that date.

Since the original law was activated and many vendors adhered to the original rules, some collections and transactions need to be unwinded. Below are some steps that may need to be addressed:

Vendors that have collected but not remitted tax:

Vendors that have collected but not remitted tax on software and computer services described in TIR 13-10 must make reasonable efforts to return that tax to the retail customers from whom the tax was collected.

Vendors that have filed returns and remitted tax:

Vendors that have collected and remitted tax on software and computer services described in TIR 13-10 must electronically file abatement applications no later than December 31, 2013 by doing the following:

  1. Login to the vendor's WebFile for Business user account
  2. Select "File, Pay or Amend Returns"
  3. Select "Amend a Return"
  4. Click "Amend" for the period 8/31/13
  5. Complete and submit the amended return
  6. Print the confirmation page that results and fax it to 617-660-7247 for expedited processing

Other than the shortened statute of limitations for filing the abatement application, all other provisions of Massachusetts general laws governing abatement applications will apply, including the need to provide supporting documentation if requested by the Department. Such substantiating documentation may include sample invoices that would show that an abatement request relates solely to software and computer services transactions, as opposed to sales of standardized or prewritten software licenses or other taxable transactions. Further, no actual refund will be made until the vendor establishes that the tax has been repaid or credited to the retail customer.

Vendors that have filed returns but not remitted tax:

Vendors that have collected tax on software and computer services described in TIR 13-10, filed a return, but not remitted the tax shown due on the return to DOR must (1) make reasonable efforts to return the tax to the retail customers from whom the tax was collected and (2) electronically file abatement applications no later than December 31, 2013 in order to eliminate the self-assessment of tax by doing the following:

  1. Login to the vendors WebFile for Business user account
  2. Select "File, Pay or Amend Returns"
  3. Select "Amend a Return"
  4. Click "Amend" for the period 8/31/13
  5. Complete and submit the amended return
  6. Print the confirmation page that results and fax it to 617-660-7247 for expedited processing

Other than the shortened statute of limitations provided for filing the abatement application, all other provisions of MA general laws governing abatement applications will apply, including the need to provide supporting documentation if requested by the Department. If a taxpayer has filed a return showing tax due and fails to file for an abatement, billing and collection activity may result.

Sales/Use Tax on standardized or prewritten software unchanged:

Longstanding statutory and regulatory rules regarding sales and use tax on standardized or prewritten software and on computer hardware remain in effect. Sales and use taxes remain fully due and payable on tangible personal property, which is defined to include transfers of the use or access to standardized or prewritten software (whether such software or the use thereof is transferred in tangible form, electronically, or in any other manner). The Department will be issuing additional guidance in the near future on determining whether a transaction is a taxable sale of standardized or prewritten software or a non-taxable service.

 
Contributor
Paul Graney

Partner
Tax & Business
Needham, MA
 
 
HAVE A QUESTION? ASK MARCUM
 
STAY IN TOUCH.

SIGN UP TODAY FOR MARCUM'S NEWSLETTERS.

ABOUT MARCUM LLP

Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation, with offices in major business markets throughout the U.S., as well as Grand Cayman, China and Ireland.

Learn More

CONNECT WITH US
               
OFFICES

Headquarters
750 3rd Avenue, 11th Floor
New York, NY 10017

Find an Office

(855) MARCUM1
info@marcumllp.com

FOUNDATION

Marcum Foundation

AFFILIATIONS

Leading Edge Alliance

DOWNLOAD THE MARCUM ON THE GO APP

© 2016 Marcum LLP. All Rights Reserved.
Privacy | Legal | Sitemap