REQUIRE CREDIT CARD COMPANIES TO PAY SALES TAX DIRECTLY TO THE STATE

By Bob Katzen

The senate 4-35, rejected an amendment that would change the current law under which credit card companies process transactions and send the money from the sale price and the sales tax directly to the merchant. The merchant then has up to 50 days to send the sales tax portion to the state.

Under the amendment, the sales tax portion of the charge would be segregated so that when the charge is settled, that portion would go directly from the credit card company to the state and the sales price would go to the merchant, giving the state the time value of that money.

Amendment supporters said the change would increase revenue to the state by an estimated $770 million annually without raising taxes. They noted the increased revenue would come from sales tax revenues that the state would now receive immediately instead of waiting up to 50 days at which point that it often loses money when a merchant is unable to pay the sales tax after bankruptcies, delinquencies and fraud.

“The words ‘unprecedented times’ are an understatement,” said amendment sponsor Sen. Diana DiZoglio (D-Methuen). “Needs are skyrocketing and businesses are closing their doors for good. Educations gaps are widening, and we are facing dwindling tax revenues. We have a responsibility to maximize existing sources of revenue. This measure increases revenue to the commonwealth without raising taxes.”

Amendment opponents said no other state has done this and it is questionable whether it would work well. They argued that banks and credit card processing companies say this system could be very costly and difficult to manage.

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