Overriding the governor’s veto, the Massachusetts legislature enacted H.B. 3535, which imposes sales tax on computer system design services, effective for transactions occurring on or after July 31, 2013.
On July 25, 2013, the Department issued Technical Information Release 13-10: Sales and use tax on computer and software services law changes effective July 31, 2013. The Release provides initial guidance regarding the statutory changes, the applicable sourcing rules, transition rules for existing contracts, and electronic filing requirements.
Given the very short time allowed to prepare for the sales tax change, service providers should be aware of the state’s guidance to help them quickly determine whether their services are subject to tax, how transactions are sourced to the state, and how to establish collection and remittance procedures.