Commonwealth Conversations: Revenue

Celebrate the 4th with a Tax-Free Star-Spangled Banner

Posted by:
Ellen Cummings, Website Editor, Publishing and Media Services, Department of Revenue

Backyard barbecues, parades and fireworks — it wouldn't be the Fourth of July without them — and no celebration would be complete without an American flag, either. The neighborhood where I lived as a kid always had a block party on the Fourth. Admittedly, I was more interested in going to the fireworks with my friends, but seeing Old Glory flying in front of every house was always an impressive sight.

So, what exactly does celebrating America's birthday have to do with taxes? Well, under Massachusetts law, many goods are subject to a 5 percent sales tax, but there are a number of exemptions, too. One particular item exempt from the Massachusetts sales tax is — your guessed it — the US flag. (Check out our Guide to Sales and Use Tax to find out what other types of items are tax-exempt.)

Whether you’re buying a small flag for your grandkids at a parade, or a large one for your home, those flag purchases are tax-free. Remember, though, the exemption applies to US flags only and any red, white and blue decorations, buntings or American flag-themed paraphernalia are taxable. You also may have to pay the sales tax on a "flag kit" if the price of the flag is not separately stated from the price of the flag pole and other parts included in the kit.

Whatever your plans may be -- have a happy and safe Independence Day!

Fiscal Year 2010 Local Aid Proposals

On June 19, 2009 the Legislature approved the Conference Committee's version of the FY2010 budget. The Division of Local Services has posted updated local aid estimates based on the Conference Committee budget recommendations to the Division of Local Services' web site.

Please be advised that these estimates are based on the appropriation levels appearing in the Conference Committee report and are subject to final approval by the Governor.

The estimate for Unrestricted General Government Aid reflects a reduction of $377.2 or 28.72 percent from original FY2009 levels. The Conference Committee budget also recommends reducing Chapter 70 by $79.0 million or 2 percent from the original FY2009 level, reducing Regional School Transportation from $61.3 million in FY2009 to $40.5 million in FY2010, and funding the state reimbursement for the Police Career Incentive program at $10 million.

Estimates for School Choice Tuition Assessments and Receipts reflect updated enrollments and costs based on final FY09 data. However, it is important to note that the Charter School Tuition Assessments and Reimbursements have not been updated with the FY2010 enrollments submitted by Charter Schools to the Department of Elementary and Secondary Education. These enrollment changes will be available by the time the Governor signs the FY2010 budget and will be reflected in the final cherry sheet estimates.

To review additional information about how the estimates were determined and what may cause them to change in the future, click on the link at the bottom for an index of the FY2010 programs and links to individual explanations.

If you have questions about these estimates, please call Lisa Juszkiewicz at (617) 626-2386, Jared Curtis at (617) 626-2320, or Donnette Benvenuto at (617) 626-2360.

Rules of the road on refund of sales tax

A local news outlet recently contacted DOR with a question concerning the law governing refund of the sales tax on an item returned to a vendor or retailer.

The law is pretty straightforward: Retailers must refund the sales tax within 90 days of purchase of the item, as long as the consumer has the sales receipt or the retailer is able to verify the purchase from their store in Massachusetts.

After 90 days, the retailer may still return an amount equal to the sales tax, but the state is no longer required to in turn credit or refund the collected sales tax to the retailer, so if the retailer does return the sales tax in this instance, it is coming out of their own pocket.

As for refunding the purchase price, that is set by the retailer's policy. Some retailers will not refund the sales prices after 30 or 60 days or in the case of "final sales"; in that case the customer is generally not entitled to a refund of either the purchase price of the sales tax after that number of days.

Keep in mind the law says refunding the sales tax must be done within 90 days; but if the retailer sets a policy that all returns must be made within 30 days or 60 days, that time limit governs refund of the sales tax as well.

However, if a retailer's return policy permits a partial refund within 90 days as the result of deducting an "established handling fee," the customer is entitled to a full refund of sales tax paid. This issue was highlighted in a letter ruling issued by DOR on May 26 of this year.

Fiscal Year 2010 values for Centrally Valued Utilities – Telephone, Telegraph & Pipeline Companies

Local boards of assessors and all those interested can now check out the fiscal year 2010 pipeline company central valuations and new growth at the Division of Local Services’ website. These values can be found in the Local Assessment section entitled "Centrally Valued Utilities - Telephone & Telegraph, Pipeline Companies" or by clicking the above link.

 

The Commissioner of Revenue has determined, and therefore certified, the full and fair cash valuation of taxable telephone and telegraph machinery, poles, wires and underground conduits, wires and pipes of the centrally valued telephone and telegraph companies, as of January 1, 2009. These valuations are certified for fiscal year 2010 under the authority of Massachusetts General Laws Chapter 59, Section 39.

 

Property owners or boards of assessors wishing to appeal the valuation(s) must make an appeal to the Appellate Tax Board on or before July 15, 2009. 

 

If you are a municipality seeking additional information please contact Walter Sandoval Dusza at 617-626-4087 or bladata@dor.state.ma.us.

 

If you are a member of the legislature or a member of the press seeking additional information please contact S.J. Port at (617) 626 – 2377 or portsj@dor.state.ma.us.

Field guide to the state taxation of alcoholic beverages

 

Right now, if you buy a glass of beer or wine or a mixed drink in a bar or restaurant, the sales tax on that purchase is 5 percent. A proposal to increase that tax to 6.25 percent is now in a legislative conference committee working on the FY10 state budget.

  

 

There is also a proposal in the conference committee to remove the tax exemption that currently exists on the sale of alcoholic beverages in package stores (Governor proposed it, Senate has approved, House has not approved). Massachusetts is one of a handful of states that do not currently levy a sales tax on alcoholic beverages sold in package stores.

 

As part of the discussion on whether to approve removal of this exemption, you may hear or read about a state alcohol excise tax that already exists on the sale of beer, wine and alcohol in package stores only. The excise tax is baked into the price and does not show up separately as a sales tax would on a package store sales receipt.

  

 

Here is a quick consumer guide to the state alcohol excise tax. Each bottle of beer sold in a package store is assessed 1-cent in excise tax, so the cost of a 6-pack includes a 6-cent excise tax while the cost of a case (24 cans or bottles) includes a 24-cent excise tax. A 750 ML bottle of wine includes an 11-cent excise tax; a bottle twice that size pays 22-cents. A 750 ML bottle of champagne pays 14-cents in excise tax. A liter of a distilled spirit that is less than 15 percent alcohol (such as Kahlua) pays 29-cents. Distilled spirits such as gin, vodka, bourbon or whiskey that do not exceed 50 percent alcohol pay $1.05 per liter.

 

 

The alcohol excise tax produced about $71 million in tax collections for the state’s general fund in the fiscal year that ended June 30, 2008, and is on track to generate about that same amount this fiscal year. Removing the sales tax exemption is estimated to generate $80 million to $100 million annually. In its approval the Senate said it wants to dedicate the new revenue to the treatment of addictions.

Meals tax collection holding up

Eleven months into the current fiscal year, which ends June 30, it is apparent that consumers are buying less in retail stores and have slowed down their purchase of new cars, but they are still eating out.

Year-to-date revenue collection numbers DOR released this week show that while collections of regular sales tax (retail items) are down $138 million or 5.1 percent from a year ago, and tax collections from the sale of motor vehicles are down $63 million or 13.7 percent from a year ago, meals tax collections of $573 million are just $2 million less than a year ago, down just 0.4 percent.

There has been a lot said about how restaurants have had to revise their menus and pricing to keep customers coming. They are apparently meeting with some success in this tough economy, because the numbers in this case don't lie. The restaurant business appears to be holding up.

To take a look at the complete revenue report for May as well as the year-to-date numbers click here. And feel free to comment with your own observation.

Check Out our Filing Season Recap Video

Posted by:
Edward Peters, Director, Publishing and Media Services

We know -- no one really enjoys tax time, but we here at DOR really do appreciate the time you give in filing your income tax returns with us every year – hey, we have to file tax returns too!  And now that April 15 has come and gone, and the dust is settling from the 2008 tax filing season, perhaps you’re wondering how you and your return fit into the larger state filing picture – and what’s coming up for next year.

If so, check out Commissioner Navjeet Bal’s recent filing season video below. The Commissioner runs down a number of tax stats such as how many MA returns were, and will be (after extensions), filed (hint: it’s over 3 million),  the average refund amount,  e-file numbers, the health care reform effort, and some tips for what to do if you, or someone you know, is having a tough time paying their taxes.

 

Thanks for taking the time to watch -- and for filing those returns!

 

 

Hearing on State Owned Land Proposed Valuations

Pursuant to MGL ch. 58 sec. 14, a formal public hearing for 2009 State Owned Land Proposed Valuations will be held by the Department of Revenue’s Bureau of Local Assessment in Boston, Massachusetts at the Saltonstall Building, 100 Cambridge Street, 6th floor conference room, on June 4, 2009 at 10:00 a.m. 

If you are a municipality seeking additional information please contact Jack Lyons at (617) 626 – 2368. 

If you are a member of the legislature or a member of the press seeking additional information please contact S.J. Port at (617) 626 – 2377.

Newest edition of City & Town now available!

The Division of Local Services is pleased to announce the newest edition of City & Town  is now available on-line!

 

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