Sales & Meals Tax Update

Voters may be asked to rollback sales tax, repeal sales tax on alcohol

In the wake of the sales tax increase to 6.25%, the next change coming for retailers and consumers begins on October 1, 2009, with the first day for collection of the new .75% local option meals tax in those communities that vote to adopt the new tax prior to August 31st.

The Department of Revenue (DOR) has been corresponding with all vendors in advance of this change to prepare them for some significant changes in their systems.  A vendor with multiple business locations in Massachusetts will no longer be permitted to report and file sales tax on meals in the aggregate, but will rather be required to separately report sales sourced to each location as prescribed by DOR.  The Department has issued final guidance on this issue for vendors of meals, which can be found on link below.

In other tax news, efforts are underway to repeal the new sales tax on alcohol sold in stores and to roll back the sales tax to 5, 4, 3, or possibly even 2 percent.  Proponents of these initiatives recently filed their intentions with the state's Attorney General to begin the process of placing these binding questions before the voters on the statewide ballot in November 2010.  If the initiatives are deemed to meet constitutional requirements by the Attorney General, backers would then need to collect more than 66,000 voter signatures by late November.  Questions that are certified then move to the Legislature, where they can be approved and passed into law, substituted or ignored by May 2010.  Often ignored, proponents of questions are then required to collect an additional 11,000 plus signatures by early July to receive final approval to appear on the ballot in November.