December 15, 2020

Five Months Late, Baker Signs FY21 Budget into Law
Retailers Unhappy with Sales Tax Changes

Governor Charlie Baker signed the FY21 state budget into law last week and with it comes changes to the state’s sales tax collection and remittance process, and a new requirement on retailers to make an advanced payment, or prepayment, of sales tax. 
 
The new law, which will likely require some additional regulatory changes at the Department of Revenue (DOR), requires that vendors calculate the sales tax collected in the first 21 days of the month, and then make an advanced payment of those actual collections less than four days later to the state, by the 25th of the month.  The remaining collections for that month, the filing and reconciliation would then need to be due by the end of the following month.  Going forward, retailers would be required to make two payments per month, your regular monthly filing and remittance and an advanced payment.  Smaller vendors are exempt from the new requirement, as the threshold to qualify for prepayment applies only to vendors with $150,000 in annual sales, meals, or room occupancy tax liability.  For a typical retailer, that is $2.4 million in annual taxable sales.  For a restaurant subject to local option meals tax, it’s only $2.15 million in annual sales.  The changes are effective April 1, 2021.
 
As you know, for many years, RAM has strongly opposed making any changes to the sales tax collection and remittance process.  We continue to lead the fight against daily remittance, or “Real Time,” sales tax collections.  In times of immediate need, many states have turned to the prepayment of sales tax as a tool to get a one-time infusion of revenue into state coffers.  Prepayment does not generate “new” revenue, but rather, it provides a one-month boost as vendors submit a portion of tax early, what equates to a down payment on the sales tax the state will receive anyway a few weeks later in the normal course of the filing period.  It is a budget gimmick, but unfortunately the Governor and the Legislature have opted to complicate something that all other states have opted to simplify.
 
RAM urged the Baker Administration and the Legislature to increase the threshold, and to add an option, a safe harbor, as all of the other prepayment states allow, to simplify this process.  We asked that vendors be allowed to base the prepayment off of an earlier tax filing, most often, as a percentage of the same month the preceding year, or even the previous month.  RAM offered numerous options, in an effort to maximize the revenue advance to the state, only to be rejected.  We also asked for a delay in the effective date to June 1, 2021 – the only month that matters to this gimmick – again to be rejected.  However, we do not intend to give up this fight and will continue to push the question before the DOR in the regulatory process and again with the Legislature.
 

The new law also includes a provision to add stiff criminal penalties for the possession or sale of sales suppression devices, or software, known as “zappers.” Additionally, the law includes language to require food and beverage third-party delivery companies to get written consent before posting a restaurant’s menu, likeness, trademark or other intellectual property online, and outlines what constitutes a valid agreement. 

 
If you have any questions or comments on these budget issues please contact RAM Vice President Bill Rennie at [email protected]. 

COVID-19: State Rolls Back to Phase 3, Step 1,
Numerous Cities Push Back Further

The state rolled back its reopening plans this week to Phase 3, Step 1, reducing allowable occupancy limits in retail stores to 40%, or 8 per 1,000 square feet.  Updated Sector Specific Protocols were released and took effect on Sunday, December 13th.  ALL MEMBERS are advised to review the new protocols and safety standards to ensure ongoing compliance:

• Retail Businesses (12/13/20)
• Restaurants (12/13/20)

For a number of cities, the state’s move was not enough.  Mayors in Boston, Brockton, Lynn, Newton, Somerville and other cities followed the state’s announcement with their own, declaring that their cities would recede further back to Phase 2, Step 2.  The cities’ moves largely do not impact the broader RAM membership, as they focus on the closure of gyms, movie theaters and other indoor entertainment activities.  Restaurant members need to be aware of the possible change to bar seating, as cities may now require local approval to seat patrons inside at the bar.

Updated PFML Workplace Poster

The Department of Family and Medical Leave has issued a revised and updated workplace poster as of 11/17/2020.  A copy of the poster may be found on the DFML website. All employers are required to display an updated poster at their place of work in accordance with their own practices.
 

#BUYINMA 5-Star Challenge May Be Over,
But RAM Hopes Consumers Continue to Shop in MA