Massachusetts – Legislative Changes Affecting Tax Laws

SALT Report 3091 – The Massachusetts Department of Revenue released an information bulletin that discusses recent legislative changes to the sales and use tax, the motor fuels excise tax, the special fuels excise tax, the cigarette excise tax, and certain tax administration laws.

Sales and Use

As previously reported in SALT Report 3053, the Transportation Finance Act amended the sales and use tax laws to reflect that certain computer system design and software modification services were taxable.  However, recent legislation repealed those provisions and these services are no longer subject to sales and use taxes.

Motor Fuels

The Massachusetts excise tax on gasoline and special fuels such as diesel, ethanol, biodiesel, and gasohol increased from 21 cents per gallon to 24 cents per gallon.

For liquefied gasses, such as propane, compressed natural gas and liquefied natural gas, the rate will remain at 19.1% of the average price per gallon as determined by the Commissioner of Revenue for each calendar quarter.

The separate underground storage tank delivery fee will remain at 2.5 cents per gallon.

Also, the ACT provides that effective January 1, 2015, both the excise tax on gasoline and special fuels and the UST delivery fee will be subject to rate increases based on increases in the consumer price index.

Cigarettes

The Act increased the excise tax on cigarettes, smokeless tobacco, cigars and smoking tobacco effective July 31, 2013.  The increased rates are as follows:

The cigarette tax was increased from 100.5 mills per cigarette ($2.51 per package of 20) to 150.5 mills per cigarette ($3.51 per package of 20) and from $3.1375 to $4.3875 per package of 25 cigarettes.

The excise tax on smokeless tobacco was increased from 90% to 210% of the wholesale price.

The excise tax on cigar and smoking tobacco was increased from 30% to 40% of the wholesale price.

Tax Administration

The Massachusetts FY 2014 Budget requires that, for the purpose of verifying any tax return, a taxpayer must provide upon request all accounting records and information in a searchable electronic format, to the extent that the taxpayer maintains these records in electronic format.

In addition to these updates, the bulletin also addresses the extension of Brownfield tax credits, community investment tax credits, corporate deductions, market based sourcing, and the repeal of certain excise provisions for utility corporations.

For Further Information

Massachusetts Department of Revenue – Technical Information Release 13-15