Massachusetts Wants Businesses To Pay Sales Tax Faster

BOSTON, MA — Gov. Charlie Baker's budget proposal includes a provision that would require businesses to pay sales tax on digital transactions every day.

The proposal has drawn criticism from the Retailers Association of Massachusetts and accounting professionals, which say the proposal would cost businesses time and money as they implement new systems and comply with the new rules. They also argue the proposal offers no benefits to the state over the current system, in which sales taxes are turned over to the state monthly.

"For many businesses, complying with real-time remittances would mean that they would have to completely overhaul their reporting processes and technology, costing them time and money," Scott Peterson, vice president of U.S. tax policy and government relations for Avalara, wrote in a commentary for Accounting Today.

While same-day tax remittance has been implemented in other countries, no U.S. state has passed a measure. It's the third time since 2015 the state has pushed for the same-day sales tax payments, and other states are watching to see how the proposal fares in Massachusetts, Peterson wrote.

If approved, the proposal would take effect July 1, 2023 and apply to all businesses that owed $100,000 or more in sales taxes in the previous 12-month period. At first, the deadline for remitting monthly sales tax payments would be pushed up. In the second phase, businesses would be required to submit state sales tax payments daily.