Post Content

If history is any guide, reporters will be calling DOR next week asking how much retail activity the sales tax holiday will have generated on the weekend of Aug. 13-14.

This is a question DOR will not be able to definitively answer, ever, because of the way in which sales tax is reported.

Companies have until the 20th of the month following to pay their sales tax. They report their entire month's taxable receipts, then calculate their payment by multiplying times .0625 percent, which reflects the sales tax rate of 6.25 percent.

They will not report receipts from Aug. 13 and 14 since those will be non-taxable. Only the individual retailers will know how much business they generated over those two days.

Thus, DOR is left to estimate the revenue loss/taxpayer gain that the sales tax holiday generates. Our current estimate is $20.5 million. There is also no way for DOR to calculate additional sales retailers may garner over the weekend as a result of sales tax holiday publicity which induces consumers, presumably in a buying mood, to purchase tax exempt items such as clothing costing less than $175.

The second question, and this comes mainly from smaller retailers, concerns the practice of larger retailers with substantial advertising budgets who urge consumers to come into their stores before the holiday to pre-select items for purchase over the weekend.

One large furniture retailer in an ad says, "We'll let you in on a little secret. You don't have to wait for the Tax Free weekend to come to …… Because as you can imagine, when everyone is trying to buy furniture or mattresses at the same time, it can get pretty hectic. Purchase between now and August 13th and 14th and your purchase will be Tax Free. Then, on August 13th or 14th, simply call us at ……. or stop by one of our locations and we'll process your order in no time. Tax Free!"

At first blush, this ad may seem to violate the rules and regulations governing the holiday which clearly state that retailers are not allowed to back-date or forward-date sales to August 13 and 14th. However, retailers are allowed to have customers come in and pre-select merchandise — as long as the sale itself does not occur until Aug. 13 or Aug. 14.

In other words, it's okay to pick out your items for purchase in advance, but you cannot swipe the credit card or have the sale processed until the sales tax holiday weekend is underway to get the no sales tax benefit.

Now, go ahead and shop!

Written By:

Recent Posts

DOR Joins Forces with Others to Fight Tax Fraud posted on Nov 25

The Massachusetts Department of Revenue (DOR) continues to be serious about combating tax and identity fraud. Not only have we continuously redoubled our anti-fraud efforts, we have in the past welcomed every opportunity to join forces with others to fight the ever-growing issues of identity   …Continue Reading DOR Joins Forces with Others to Fight Tax Fraud

Tax Practitioners Report in on Sneak Preview of MassTaxConnect posted on Nov 24

On November 30th, the Massachusetts Department of Revenue (DOR) will release MassTaxConnect, the next generation tax system, to business and corporate taxpayers. The new filing system will replace WebFile for Business. In anticipation of the launch, DOR invited tax practitioners to preview MassTaxConnect and weigh   …Continue Reading Tax Practitioners Report in on Sneak Preview of MassTaxConnect

MassTaxConnect: A Big Win for Small Businesses in the Commonwealth posted on Nov 23

Small businesses are the lifeblood of a healthy economy. That’s true nationally, and that’s certainly true here in Massachusetts. With the advent of DOR’s newest electronic filing system, MassTaxConnect, life is about to get a whole lot easier for many companies across the Commonwealth. Currently,   …Continue Reading MassTaxConnect: A Big Win for Small Businesses in the Commonwealth