Massachusetts – Guidance Issued Regarding Refunds for the Repealed Computer Services Tax

SALT Report 3053 – The Massachusetts Department of Revenue issued guidance regarding the repealed sales and use tax on computer system design services and the modification, integration, enhancement, installation, or configuration of standardized software. The tax was effective July 31, 2013, and has been repealed retroactively to that date.

Therefore, any vendors who have collected but not remitted tax to the Department must make reasonable efforts to return the tax to their customers. Vendors who have collected and remitted tax are required to electronically file abatement applications by December 31, 2013.

Other than the shortened statute of limitations for filing the abatement application, all other abatement provisions will apply, this includes the need to provide substantiating documentation if requested by the Department.  Documentation may include sample invoices that would verify that an abatement request is related to a software and computer services transaction, as opposed to the sale of standardized or prewritten software licenses or another taxable transaction.  The Department warns that no refunds will be made until the vendor can establish that the tax has been repaid or credited to the customer.

Additionally, the Department announced that the following policy directives and guidance have been revoked, as they were specific to the repealed tax:

  • TIR 13-10, Sales and Use Tax on Computer and Software Services Law Changes Effective July 31, 2013 [1]
  • Working Draft TIR 13-XX: Further Guidance Regarding the Scope of Sales and Use Tax on Computer and Software Services, and
  • TIR 13-14: Extension of Due Date for First Reporting of Sales and Use Tax on Computer and Software Services

Also, the Frequently Asked Questions document and any other informal guidance issued by the Department that was related to the repealed tax on computer and software services have also been revoked.

For Further Information

Massachusetts Department of Revenue – Technical Information Release 13-17