Registration Open to Get Set Up on Remitting Short-Term Rental Taxes
July 1, 2019 Government & Community Affairs
As a real estate brokerage, you are more than likely an "intermediary" under the short-term rental law. That means you collect rent on behalf of owners, or as the law calls them "operators", or short-term rentals. By doing so, you are required to collect and remit taxes owed for that stay to the Massachusetts Department of Revenue.
Intermediaries facilitate property rentals, whether in person or through an automated system. They also collect or facilitate the collection of rent on the property, which could include serving as a third party processor through which the payment passes on its way to an operator. An intermediary could be a real estate broker, a hosting platform or an operator’s agent.
Registration opened through MassTaxConnect on July 1. All intermediaries will register just once. They will not have to register separately for each rental property.
For any rental that begins on or after July 1 for which an intermediary collects rent payments, the intermediary is also responsible for collecting and remitting all applicable taxes, fees, and excise associated with the rent.
An intermediary must confirm that the operator whose rent it is collecting is registered with the Department of Revenue through MassTaxConnect and ask for the operator’s certificate number for your return. It’s the responsibility of the intermediary to confirm that operators are registered.
However, the Massachusetts Department of Revenue says that during the transition to this new tax type an intermediary may not be able to obtain operator certificate numbers in time to file the return. Up until November 1, if you don’t have the certificate number to remit taxes, you must instead include the operator’s Federal ID number or Social Security number. As of November 1, all returns must include the certificate number.
By the 20th of every month after the stay begins, taxes are due to the Massachusetts Department of Revenue through MassTaxConnect.
The first payment - for stays that started in July 2019 - are due by August 20th.
There are two options for filing returns. You can choose to manually enter information for properties or you can upload a consolidated return for multiple properties using Excel. An Excel template is available for uploading through MassTaxConnect with all the appropriate cells in the appropriate order. If you choose to attach your own spreadsheet, the cells must be in the same order as the template.
Information on the return must include a certificate number or Federal ID [or Social Security Number; accepted through November 1, 2019] for each operator along with the name and address of the operator and taxes collected by tax type and totals. Because the intermediary is responsible for payment of tax, operators do not pay tax on rent amounts that are paid over to them by an intermediary.