It is not uncommon these days to hear retailers advertising sales in which they proclaim that they will pay the sales tax.
Up until a change enacted last August, such a proclamation was against state law.
However, as a result of Chapter 31 of the Acts of 2010, such advertising is now perfectly legal.
DOR published Technical Information Release10-11 in August 2010. Section X of the TIR deals with vendor advertising.
"Section 50 of the Act repeals the provision in Chapter 64H that prevented retailers from advertising that they will assume or absorb the sales tax. Chapter 64H, Section 23, stated, in part, that it was 'unlawful for any vendor to hold out or state to the public or any consumer, directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the vendor or that it will not be added to the selling price of the property or service sold, or, if added, it or any part thereof will be refunded'."
The purpose of the law was to insure that vendors separately stated the sales tax from the purchase price, which allows DOR to make sure the tax is paid and collected and which makes clear to the consumer the purchase price as opposed to the sales tax.
While eliminating the language barring retailers from advertising that they will pay the sales tax, the law still requires a separate statement of sales tax and purchase price. "However, a vendor may offer a discount equal to the amount of applicable tax, and may now advertise such a discount as a 'store sponsored sales tax holiday,' or use similar language," the TIR states.
What does this mean in practice? Assume a vendor normally sells an item for $100 plus the 6.25 percent sales tax of $6.25, in which case the customer is paying $106.25. With a store sponsored tax holiday, the taxable price of the $100 item could be discounted to $94.12, with a separately stated sales tax of $5.88, requiring the customer to pay $100. In other words, the price of an item and the accompanying sales tax may be equal to the original cost of the item without the cost of sales tax.
The TIR concludes: "The taxable sales price (after discount) and the tax must be separately stated on any invoice or receipt issued to the customer by the vendor as required by Chapter 64H, Section 5," of the Massachusetts General Laws.
Prep Early for Next Tax Season posted on May 20
Filing season is finally over and we know the last thing on your mind is next tax season. But did you know that if given more prep time, you could be saving yourself lots of stress and time? Start planning for next tax season now …Continue Reading Prep Early for Next Tax Season
DOR’s Participation in the Family Court Workshops posted on Apr 22
Once a month, the Department of Revenue’s Child Support Enforcement (CSE) lawyers and staff volunteer to be a part of the Family Court Workshops for Mothers and Fathers at the Suffolk County Probate & Family Court in Boston. The workshops, a joint venture between community …Continue Reading DOR’s Participation in the Family Court Workshops
DOR Ruling Favorable in First Circuit Judgment posted on Mar 17
The United States Court of Appeals for the First Circuit issued judgments in the Department of Revenue’s (DOR) favor last month, finding that taxpayers in Bankruptcy proceedings cannot discharge late filed tax returns. The court consolidated two similar cases brought before them involving a total …Continue Reading DOR Ruling Favorable in First Circuit Judgment