CHANGES TO ROOM OCCUPANCY EXCISE
The new law expands the room occupancy excise to include short-term rentals. Aside from taxing short-term rentals, there are some aspects of the law that impact traditional lodging establishments already charging room occupancy excise, like bed and breakfast establishments, hotels, lodging houses and motels.
The following lists are meant only to highlight a few of the changes for short-term rentals and traditional lodging accommodations. We recommend reviewing the frequently asked questions and the technical information release (TIR), on the Department of Revenue website, for detailed information on the new law.
Impact on short-term rentals
- Rent from short-term rentals will now be subject to room occupancy excise for any agreements made on January 1, 2019 or after for occupancies beginning July 1, 2019 or after.
- “Rent” includes, insurance, linen fees, cleaning fees and booking fees.
- A short-term rental is an occupied property where at least one room or unit is rented using advance reservations – this might include an apartment, house, cottage or condominium.
- Operators of short-term rentals must register with MassTaxConnect on or after July 1, 2019 when registration will be available.
- Operators who rent more than 14 days in a year must collect the excise.
- An exemption is made for single occupancies of more than 31 consecutive days.
- Intermediaries who collect rent on behalf of short-term rental operators are required to collect all excises and fees and remit to the Department of Revenue.
There are other important aspects of the room occupancy excise worth noting as described in the frequently asked questions and TIR.
Impact on traditional lodging accommodations
- There is an expansion of “occupancy” to include any and all furnishings, services, accommodations, like breakfast at a B&B, whether the occupant chooses to avail themselves of the services or not.
- There is an expansion of “rent” to include insurance, linen fees, cleaning fees and booking fees.
- Intermediaries who collect rent on behalf of the operator of the lodging establishment will be required to collect and remit tax to the Department of Revenue.
The effective date for those currently collecting room occupancy excises (and new establishments) to begin collecting the room occupancy excise, based on the new definitions of rent and occupancy, is July 1, 2019. This would include any applicable local excises. Any price quotes, or collection of rents for occupancies after July 1, 2019 should include the excise.
Stay tuned, whether you are in the short-term rental or traditional lodging accommodations industries, for more information about tax reporting under the new law. Registration for short-term rental operators or intermediaries will be available through MassTaxConnect as of July 1, 2019. We will also continue to update the guidance on our website with any changes that take place.
After reviewing the frequently asked questions and technical information release, please contact the Trustee Tax Contact Center at 617-887-6367 (choose #4 for both prompts) with any additional questions.
Here are updates to the Paid Family and Medical Leave Act:
Private Plan Exemption Process Now Available at: https://www.mass.gov/info-details/exemptions-from-paid-family-and-medical-leave-for-private-plans
The Department of Family and Medical Leave’s private plan exemption process is now available for businesses in the Commonwealth with Paid Family and Medical Leave (PFML) plans offering benefits that meet or exceed those provided by the Commonwealth’s PFML law.
The updated exemption web page includes:
- Information on required documentation
- Information on how to calculate the required surety bond
- Links to details from the Massachusetts Department of Revenue on how to file for an exemption from making family or medical leave contributions to the Department of Family and Medical Leave with MassTaxConnect
Applications for exemptions for private plans must be submitted to the Massachusetts Department of Revenue’s web-based application MassTaxConnect by June 30, 2019. Contributions to the program for those not receiving an exemption will begin on July 1, 2019.
Workforce Notifications, all languages now posted at: https://www.mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical-leave
The Department of Family and Medical Leave has posted an additional six language options to the notice required to be provided by employers and covered business entities to their current workforce of PFML benefits, contribution rates, and other provisions as outlined in M.G.L. c. 175M sec. 4 on or before May 31, 2019.
The notice, which may be provided electronically, must include the opportunity for an employee or self-employed individual to acknowledge receipt or decline to acknowledge receipt of the information.
Please note! Federal Employer Identification Number
The identification number assigned by the Department of Family and Medical Leave will be the employer’s Federal Employer Identification Number (“FEIN”). Please use your FEIN as your Employer ID Number on the “Employer Notice to Employee” and the “Employer Notice to Self-Employed Individual” Forms.
January marked the beginning of a new two year legislative session at the State House. Issues such as education reform, health care costs, sports betting, transportation, and climate change are expected to be the hot button issues that will be dealt with during this session. As legislators took their seats, the Chamber worked to ensure the region’s priorities were recognized. Just a week after they had been sworn in, we held our annual legislative briefing with the North Central Massachusetts Delegation, highlighting our State House goals for 2019. The topics discussed included economic development, regional planning, support for the tourism and manufacturing industries, and education reform. Before the month was out, the Chamber rallied support behind three bills which address several of these issues. These included legislation focused on industry certified credentialing in high schools and two bills which support the region’s growing visitor industry.
In other news, the Chamber also recently testified at a public hearing on the proposed regulations associated with the new Paid Family and Medical Leave Law. Once codified, these regulations will guide how the recently established Department of Family and Medical Leave enforces this law. Having reviewed the current draft, we attended a public listening session in Worcester and voiced concerns over the administrative burdens for small businesses and a lack of clarity regarding approval of private, alternative plans. The Chamber will also host a public session with the Executive Office of Labor and Workforce Development on March 8, providing local businesses an opportunity to testify or ask questions about the regulations.
To raise awareness of the recommendations from our recent report Build North Central Massachusetts: Promoting the Industrial Heart of Massachusetts, we also organized editorial meetings with regional press outlets and conducted outreach to legislative leaders. The Chamber hopes that the report will help inform and motivate public policy leaders as they begin the dialogue around education reform.
The Chamber will continue to monitor these vital issues and ensure that the needs of the North Central Massachusetts Business Community are not ignored by Beacon Hill. If you run a business in the region and want to make your voice heard on these or any other issues, please contact the Chamber’s public affairs manager, Christopher McDermott, at (978) 353-7600 ext. 224 or firstname.lastname@example.org.
Six months ago, the State House passed a raft of legislation that had been negotiated between business advocates and labor groups. The compromise eliminated numerous ballot questions in return for concessions on the minimum wage, paid leave, and mandatory premium pay on Sundays. On the 1st of this year, the initial phase of the Grand Bargain’s implementation took effect. As employers, you have a right and a need to know how these changes impact your business. see chart for a brief overview of the rules which just took effect.
*Due to an error in the Grand Bargain Legislation’s language, mandatory premium pay of time and a half (1.5 multiplier) will remain in effect for New Year’s Day, Columbus Day, and Veterans’ Day until further notice.
As was alluded to above, this is only the first phase of the Grand Bargain’s multi-year rollout. Further changes are approaching, and we encourage you to speak with your payroll company or human resource department about how these and future adjustments will impact you. If you would like to learn more about the Grand Bargain and its schedule of implementation, you can do so here.
If you have any questions or concerns about the Grand Bargain, the Chamber’s policy on it, or our stance on other matters before the State House, please contact Christopher McDermott at (978) 353-7600 ext. 224, or email him at email@example.com.
The Massachusetts Department of Revenue will now oversee the process for claiming a certificate. As of January 1, 2019, the process will be completed online through the Department’s MassTaxConnect. Here are some of the highlights that will be important to qualifying small businesses:
- As of January 1, 2019, small businesses will apply online for an exemption certificate through the MassTaxConnect application rather than submitting a paper Form ST-13 to their energy provider
- Current (2018) exemptions were automatically extended for small businesses through March 31, 2019
- Small businesses must apply for a 2019/2020 exemption certificate by March 31, 2019
- Exemptions granted in 2019, and after, will be effective for up to two calendar years
- DOR will send renewal reminders prior to the exemption certificate’s expiration date in 2020
For additional information, including a link to the draft regulation, businesses may refer to the Department’s small business energy exemption page which we will continue to update as information is available.
On July 26, 2018, St. 2018 c. 154, § 68, was enacted into law, amending the EMAC Supplement statute, to require that the Director of the Department of Unemployment Assistance, in consultation with the Secretary of Administration and Finance develop a hardship waiver process for a employers experiencing financial hardship due to liability for the EMAC Supplement.
For a hardship to be approved an employer must fill out the application and include sufficient supporting documentation justifying need. After review, a determination without appeal rights will be issued to the employer. A hardship waiver is temporary and related to a specific quarter. Hardship waiver requests must be received during the first two weeks of the filing period. Employers who receive a waiver will be required to timely file and pay any additional contributions or the waiver will be reversed and the total amount (including interest) will be payable.
For additional information about the EMAC Supplement Hardship Waiver, please visit: https://www.mass.gov/info-details/the-emac-supplement-hardship-waiver
The Chamber recently unveiled its Public Policy Agenda for the new fiscal year–outlining the Chamber’s legislative priorities on issues important to businesses and the advancement of North Central Massachusetts. The agenda was developed to serve as a blueprint for the Chamber’s government affairs efforts and were reviewed and approved by the Government Affairs Committee and Board of Directors. The agenda can be found online at www.NorthCentralMass.com.
The Chamber continues to be active on the local level, monitoring legislation and advocating on behalf of members. In Fitchburg, the Chamber testified at the annual tax classification hearing and successfully secured an unprecedented eight point reduction to the property tax shift. This move towards a single rate reduces the impact on commercial and industrial property owners and makes the city and region more competitive. The Chamber will also advocate in Leominster for the city to maintain its single tax rate and in the Town of Clinton for a reduction in their dual tax rate.
Fitchburg’s license commission also recently held a public hearing in regards to proposed regulations on BYOB (Bring Your Own Bottle) establishments. The Chamber submitted a letter opposing the current proposal and articulating the concerns of many local businesses. Energy costs, the EMAC assessment and Ballot Question 1 were also issues that Chamber staff were involved with over the Fall.
In other news, the Chamber plans to reconvene its Manufacturing Taskforce to continue its efforts to improve the workforce pipeline and improve the business climate for this important industry for the region. The Chamber will be compiling the recommendations from the taskforce and issuing a final report after the first of the year. The report is intended to help the Chamber and private sector work more effectively with government at all levels to ensure that the region has a competitive workforce and can support our local manufacturers.
In the coming months, we look forward to turning back towards the state as we convene our annual Legislative Briefing to organize efforts on Beacon Hill to address a number of crucial issues for businesses in the region.
If you run a business in North Central Massachusetts and wish to make your voice heard on any of these issues, please reach out to Christopher McDermott at 978.353.7600 ext. 224 or firstname.lastname@example.org. We want to hear what’s important to you!
Fitchburg’s City Council took a historic step this past October, voting to close the gap between commercial and residential property tax rates by an unprecedented six points. This brought the business community’s share of Fitchburg’s property tax burden to 106 percent of the residential levy. Massachusetts allows two models for property taxes: single and dual rates. The single rate means that both residential and commercial properties are taxed at the same level. Meanwhile, a dual rate system dictates that one group – typically businesses- shoulders more of the burden and pays a higher share of taxes based on a property’s assessed value.
A single rate tax system has come to be recognized as a key indicator that a community is open for business, and the Council acknowledged this at their annual tax classification hearing. Through a spirited discussion, a number of councilors pointed out that that seventy eight percent of Fitchburg’s property fell under a residential use. If Councilors hoped to reduce the tax share carried by voters, the only responsible method would be to attract new commercial investment, as had been done with Great Wolf Lodge and GameOn Fitchburg. Maintaining a dual rate would only serve to discourage such efforts and perpetuate the root problem.
As always, the North Central Massachusetts Chamber of Commerce was present at the meeting and attested to the importance of this shift. In particular, they spoke to the impact felt by the types of small businesses which make Fitchburg unique. “Though some would argue that business owners can afford a higher levy,” stated Chamber President Roy Nascimento in his testimony, “these taxes can prove a serious hardship to the local businesses which typify Main Street.” He went on to argue that it placed an additional hurdle before investors who might otherwise take interest in the community.
Ultimately, the Council voted 7-3 in favor of reducing the burden on commercial property owners. Commercial property tax owners will still see modest increases, but at a lower value than if there had been no change. Overall, this reduced the tax burden on businesses by $702,836. The Chamber would like to thank Councilors Kushmerek, Green, Clark, Donnelly, Zarrella, Kaddy, Fleming, and Walsh for supporting this historic action.
860 South Street Fitchburg, MA 01420