How To Report Massachusetts Use Tax

Both Massachusetts and Rhode Island appear to be very interested in capturing any use tax income associated with individual taxpayers who purchase or acquire property subject to a use tax because either a sales tax was not paid or the payment (to another state) was less than the resident state sales tax.

On the Massachusetts return, Form 1, line 33 is used to meet the use tax filing obligation.  A question arose at our January state update seminar about whether there should be an entry (i.e. a zero) on line 33 when there is no use tax to report, or should the line be left blank.  William J. Lauziere, representing the MA Dept. of Revenue explained that entering a zero would start the clock on the three year statute of limitations for auditing the filing, while leaving the line blank would not.

Your editor raised a concern because an instruction sheet accompanying the January 2014 release of Drake tax software stated:

“Form 1, line 33 or Form 1 NR/PY, line 38,…is to be left blank if no use tax is due.  Do not insert O.”

Mr. Lauziere stated that the software provider was incorrect, and he provided us with the above explanation. Your editor checked his software, and a zero appears on line 33 absent any other entry.  However, does that mean that a blank will be electronically submitted, or will Drake transmit a zero?  According to Drake, a zero will be electronically submitted, so the January release instructions do not mean that anything has changed.  A zero default is a zero transmitted.