Massachusetts – Computer Services Tax Repealed

SALT Report 3043 – On September 26, 2013 both the Massachusetts House of Representatives and Senate approved legislation that repeals the State’s controversial 6.25% sales and use tax on computer system design services and on the modification, integration, enhancement, installation, or configuration of standardized software.

The tax has been a source of controversy from the moment it was approved by the Legislature and signed into law by the Governor three months ago. Opponents of the tax claimed that it would be devastating to the State’s tech industry.  Specifically noted was that the law would create an undue hardship by imposing time tracking and reporting requirements on service providers who develop standardized software for clients.

However, the Bill repeals the tax retroactive to July 31, 2013 the date it originally took effect.  Because of this, the Department will refund any taxes that were remitted during that time period.  Sellers are obligated to make reasonable efforts to return any taxes that were collected from purchasers but not remitted to the Department. Taxpayers who wish to file a claim for refund must file an abatement application by December 31, 2013.

For Further Information

Massachusetts State Legislature – House Bill 3662