HOUSE DOCKET, NO. 3914        FILED ON: 1/17/2025

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3208

The Commonwealth of Massachusetts

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PRESENTED BY:

Francisco E. Paulino

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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 establishing a sales tax on digital advertising services.

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PETITION OF:

HOUSE DOCKET, NO. 3914        FILED ON: 1/17/2025

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 3208

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Fourth General Court
(2025-2026)

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An Act establishing a sales tax on 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. General Laws Amendment.

Chapter 64H of the General Laws is hereby amended by adding the following section after Section 34:

Section 35. Sales Tax on Digital Advertising Services.

(a) Definitions. For purposes of this section, the following terms shall have the following meanings:

"Digital advertising services," the sale or purchase of advertising space through digital interfaces, including websites, mobile applications, and other internet-connected platforms.

"Purchaser," any individual, business, or entity paying for digital advertising services to target users located within the Commonwealth.

"Vendor," any individual, business, or entity providing digital advertising services to purchasers targeting users located within the Commonwealth.

"Taxable transaction," the sale of digital advertising services where the target audience is determined to be located within the Commonwealth, based on the user’s Internet Protocol (IP) address, geolocation data, or another reasonable method for determining location.

(b) Imposition of Tax.

A sales tax is hereby imposed on the purchase of digital advertising services targeting users located within the Commonwealth.

The tax rate shall be 6.25% of the gross sales price of the digital advertising service.

The tax shall be collected by the vendor at the time of the sale and remitted to the Department of Revenue in accordance with the provisions of this chapter.

Transactions exempt from the sales tax under Chapter 64H, Section 6 shall also be exempt from this tax.

Vendors with gross annual digital advertising sales below $2,500,000 targeting users in the Commonwealth shall be exempt from this tax.

SECTION 2. Allocation of Revenues.

(a) Administrative Costs.

Up to 5% of the total revenue collected under this section shall be allocated for administrative costs associated with implementing, enforcing, and managing grant programs. This allocation shall be distributed as follows:

The Department of Revenue may retain 1% for administering and enforcing the digital advertising tax.

Each administering agency—Massachusetts Department of Telecommunications and Cable, Massachusetts Department of Public Health (DPH), and Massachusetts Department of Elementary and Secondary Education (DESE)—shall receive 1.33% each to manage their respective grant programs, including technical assistance and program oversight.

(b) Delayed Appropriation.

The disbursement of grant funds shall be delayed by up to one fiscal year after the start of revenue collection to ensure sufficient funds are accrued for program stability and initial administrative setup.

During this period, the Department of Revenue shall establish necessary regulations, systems, and interagency coordination frameworks to facilitate effective program implementation.

(c) Allocation of Program Funds.

After accounting for administrative costs, the remaining 95% of the revenue shall be allocated equally among the following three categories, with each receiving exactly one-third (33.33%) of the total.

Local Access Television Programs:

Administered by the Massachusetts Department of Telecommunications and Cable, grants shall support:

Increasing community media programming.

Enhancing production quality and digital capabilities.

Expanding access to diverse and inclusive programming.

Public Education Campaigns:

Administered by the Massachusetts Department of Public Health (DPH), grants shall fund:

Evidence-based resources for parents, educators, and students.

Workshops and seminars in schools and communities.

Digital and print materials promoting mental health and safe social media use.

Research on Artificial Intelligence in Education:

Administered by the Massachusetts Department of Elementary and Secondary Education (DESE), grants shall fund:

AI tools designed to address diverse learning needs.

Partnerships between public schools and research institutions.

Pilot programs for innovative technologies that improve learning outcomes.

(d) Technical Assistance.

Each agency shall allocate a portion of its administrative funding to provide technical assistance to grant applicants, with an emphasis on supporting small organizations, underserved communities, and rural areas.

(e) Utilization and Reallocation of Funds.

Allocated program funds must be utilized within two (2) years of disbursement.

Any unused program funds shall revert to the general allocation pool for redistribution in subsequent years.

(f) Reporting Surplus Administrative Funds.

At the end of each fiscal year, each agency shall submit a report to the Department of Revenue detailing how administrative funds were utilized. Any unspent administrative funds shall be returned to the general allocation pool for redistribution.

SECTION 3. Effective Date.

This act shall take effect on January 1, 2027, with grant disbursements beginning no earlier than January 1, 2028.