Governor Baker files FY20 State Budget Proposal
Includes Marketplace Sales Tax Collection & Proposal to Require Earlier Sales Tax Remittance
Yesterday, Gov. Charlie Baker filed his FY20 state budget proposal, which includes a number of new policy proposals of interest to the retail industry. 
As requested by RAM, the Governor’s budget includes the extension of sales tax collection responsibility to marketplace facilitators and those out-of-state sellers that sell through marketplaces.  This important step to update the Commonwealth’s sales tax collection laws is in line with similar actions being taken across the country in the wake of the Wayfair Decision, and will bring us closer to true marketplace and sales tax fairness between all sellers.  The budget also paves the way for the MA Department of Revenue (DOR) to lower the thresholds set in its October 2017 regulation (Vendors Making Internet Sales) which established an economic nexus standard.  Those standards ($500,000 in sales AND 100 or more transactions) are expected to be lowered by regulation, reflective of the standards set in the Wayfair decision.  RAM had filed legislation last week addressing both of these issues, but ideally, we can convince the Legislature to retain these provisions in the budget as the process moves forward.
The Governor’s budget also proposes changes to the state’s sales tax collection and remittance process.  For the past two years we have fought against and defeated proposals calling for “Real Time” sales tax collection.  Currently, vendors collect and remit MA sales tax by the 20th day of the following month.  This year, the Governor has proposed changes directing the DOR to -- by regulation -- require a preliminary remittance prior to the due date of the sales tax return, for vendors who annually remit in excess of $100,000 in sales tax.  In informal discussions with the Administration, this has been described to us as a possible preliminary payment at the end of the third week of that same month.  The vendor would then remit the remaining collections for the rest of the month and reconcile the difference by the end of the third week the following month.  This is not presented as a “Real Time” collection proposal, but rather a change in the remittance due date, moving the bulk of the remittance up by about four weeks.  The Administration estimates that this will result in a one-time revenue boost of $306 million.
These proposals can be found in the Outside Sections of the Governor’s budget, in Sections 25, 26, 34, 36-39, 69 and 70.
The Governor’s budget now goes to the House, which will release and debate its own budget proposal in mid to late April.  As the budget moves forward, your input is critical.  Please provide us with your thoughts and feedback on these important sales tax issues by contacting RAM Vice President, Bill Rennie, at [email protected], or (617) 523-1900, ext. 110.