HOUSE DOCKET, NO. 3052        FILED ON: 1/20/2023

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2787

The Commonwealth of Massachusetts

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PRESENTED BY:

Dylan A. Fernandes

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to taxation of digital advertising services.

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PETITION OF:

HOUSE DOCKET, NO. 3052        FILED ON: 1/20/2023

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 2787

[SIMILAR MATTER FILED IN PREVIOUS SESSION
SEE HOUSE, NO. 2894 OF 2021-2022.]

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act relative to taxation of digital advertising services.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Chapter 29 of the General Laws is hereby amended by inserting after section 2KKKKK, as inserted by section 1 of chapter 254 of the acts of 2020, the following 2 sections:-

Section 2LLLLL. There shall be established and set up on the books of the commonwealth a separate fund to be known as the Local Newspaper Trust Fund, hereinafter referred to as the fund, for the purposes of aiding local businesses and promoting an informed populace. The fund shall provide, without further appropriation, grants to newspapers: (i) with a principal place of business within the commonwealth and (ii) circulation not exceeding 50,000 on weekdays. The secretary of housing and economic development shall administer the fund, develop eligibility and application requirements and select grant recipients.

The fund shall consist of: (i) $3 million of revenue from the tax on digital advertising services within the commonwealth as provided in subsection (d) of section 82 of chapter 63, annually; (ii) interest earned on such revenues; and (iii) funds from public and private sources, including, but not limited to, gifts, federal or private grants, donations, rebates and settlements received by the commonwealth that are specifically designated to be credited to the fund.

No expenditure from the fund shall cause the fund to be in deficiency at the close of a fiscal year. Monies deposited in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent fiscal year.

Section 2MMMMM. There shall be established and set up on the books of the commonwealth a separate fund to be known as the Pre-K and After School Program Trust Fund. The fund shall provide, without further appropriation, grants to the Massachusetts universal pre-kindergarten program, early education and care programs and school-aged child care programs, as defined in section 1A of chapter 15D. The commissioner of elementary and secondary education and commissioner of early education and care shall administer the fund, develop eligibility and application requirements and select grant recipients.

The fund shall consist of: (i) 50 per cent of the revenue from the tax on digital advertising services within the commonwealth as provided in subsection (d) of section 82 of chapter 63; (ii) interest earned on such revenues; and (iii) funds from public and private sources, including, but not limited to, gifts, federal or private grants, donations, rebates and settlements received by the commonwealth that are specifically designated to be credited to the fund.

No expenditure from the fund shall cause the fund to be in deficiency at the close of a fiscal year. Monies deposited in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent fiscal year.

SECTION 2. Chapter 63 of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by adding the following section:-

Section 82. (a) As used in this section the following terms shall, unless the context clearly requires otherwise, have the following meanings:

“Digital advertising services”, advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising and other comparable advertising services.

“Digital interface”, any type of software, including a website, part of a website or an application that a user may access.

“IP address”, a unique string of characters assigned to each device connected to a computer network using the Internet Protocol for communication.

“User”, an individual who accesses a digital interface using a device with an IP address.

(b) There shall be assessed and levied in each calendar year an excise on the sale of digital advertising services within the commonwealth on persons with revenue from digital advertising services in excess of $25 million per year within the commonwealth. The excise shall be assessed at a rate equal to 5 per cent of the person’s annual revenue from digital advertising services within the commonwealth. A digital advertising service shall be deemed to have been provided within the commonwealth if it is received on a user’s device having an IP address located within the commonwealth.

(c) Persons with revenue from digital advertising services in excess of $25 million per year within the commonwealth shall remit the excise described in subsection (b) to the commissioner of revenue on a monthly basis.

(d) The commissioner of revenue shall deposit revenue from the excise described in subsection (b) as follows: (i) $3 million in the Local Newspaper Trust Fund established in section 2LLLLL of chapter 29, annually; (ii) 50 per cent of the annual revenue into the Pre-K and After School Trust Fund established in section 2MMMMM of said chapter 29; and (iii) any remaining funds into the General Fund established in section 2 of said chapter 29.