Massachusetts Taxes

Sales Tax Rates—Local room occupancy tax and local option meals excise.

The Massachusetts Department of Revenue has updated the list of localities that have adopted the local meals excise and the localities that have increased their existing local option room occupancy tax. A 2009 legislation (L. 2009, c. 27) authorized a city or town to impose a new local option sales tax on restaurant meals originating within the city or town at the rate of 0.75% of the gross receipts of the vendor from the sale of restaurant meals and increased the maximum rate of the local option room occupancy excise tax from up to 4% to up to 6% for cities or towns that adopt this increase. Effective October 1, 2010, the following localities have increased their local room occupancy tax: Barnstable, 6%; Lanesborough, 6%; North Attleborough, 4%; and Randolph, 6%. The following localities have adopted the local option meals excise, effective October 1, 2010: Barnstable, Brockton, Easthampton, New Bedford, Stoneham, and Westport. As of October 1, 2010, 115 localities have adopted the local option sales tax on meals and 85 localities have 4% to 6% local option room occupancy tax.

CORPORATE INCOME TAX—Limitation on use of pre-combination NOL.

The Massachusetts Department of Revenue has ruled that under the facts presented, the limitation on the use of pre-combination net operating loss (NOL) carry forwards under Mass. Regs. Code §63.32B.2(8)(f)830 CMR does not apply where a Massachusetts corporate taxpayer, a corporation that is subject to combined reporting, seeks to utilize pre-combination NOL carry forwards and: (1) the taxpayer and its combined group members are to attribute 100% of the group's income to Massachusetts in the tax year that the taxpayer seeks to use the carry forward; (2) there are no prior tax years for which the taxpayer and its affiliated corporations were subject to combined reporting; (3) the corporation attributed 100% of its income to Massachusetts in each of the pre-combination tax years in which it either incurred or carried forward the NOLs that it seeks to use; and (4) the taxpayer had no affiliated corporations that were subject to Massachusetts nexus that could apportion their income in any of the taxpayer's loss years. The taxpayer did not have income from business activity taxable in another state in the pre-combination taxable year in which the underlying losses were incurred, did not have business activity taxable in another state in the post-combination 2009 taxable year in which it seeks to use the NOL carry forwards, and did not have business activity taxable in another state in any intervening taxable year, such that the whole of its taxable net income in all the relevant tax years is attributed to Massachusetts. The only corporation subject to the corporate excise that was affiliated with the taxpayer during the tax years at issue, 2004 to 2009, was its parent corporation for the tax years 2008-2009, for which tax years the parent corporation also had no business activity taxable in another state. (Massachusetts Letter Ruling 10-6, 10/04/2010.)