The bills of Bay State channel-surfers who purchase, rent, or lease a cable box from their television provider may soon change as state tax collectors verified this week that the state sales tax is now applied to those transactions.
The sale or rental of any cable box device that can do more than just link a cable system to a TV broadcast receiver and enable parental controls is no longer exempt from the state’s 6.25% sales tax, according to an order signed by Revenue Commissioner Geoffrey Snyder on Friday. This implies that the tax is now applied to cable boxes with DVR capabilities or other standard features, such as the capacity to connect to well-known streaming services.
It was determined that sales and rentals of cable television converter boxes to Massachusetts cable television customers are exempt from sales and use taxes because they fall under a statutory exemption for items consumed or used directly and exclusively in the operation of commercial television transmission. This directive was issued in 2008, months before analog television was discontinued, as viewers were pressured to purchase cable packages or digital converter boxes to accommodate the new digital signal.
However, both technology and television viewing habits have evolved. Streaming services and packages are gaining traction on cable TV bundles, and so-called smart TVs make it easy to browse the internet with a clicker. According to DOR, the cable converter boxes, set-top boxes, and cable system terminal devices that were taken into consideration when it issued the 2008 ruling were solely used to apply parental controls or to receive programs or information from the cable provider.
In February, the Healey administration suggested doing away with the exception, and on Friday, it released a draft of the directive for tax professionals to comment on.
In March, the Nashoba Valley Voice’s editorial board blasted the proposal, claiming that the sales tax will only encourage more people to cut their cable, leaving the elderly and less tech-savvy to bear the burden of an intrusive state bureaucracy. Without adding a state tariff, the editorial board of the paper urged its readers to flood that comment section and make it clear to the DOR that they already pay more than enough for cable TV.
Since such devices are not used exclusively in the operation of commercial television transmission, the new official policy at DOR states that a transaction involving a device that does more than receive programming or information from a cable provider for the purpose of commercial television transmission is not eligible for the exemption.
Snyder’s directive states that a device that has extra features, such as the ability to (i) schedule, record, store locally, and play back recorded content for later viewing, (ii) access or run software applications like games, productivity tools, web-based content streaming services, or other non-television applications, or (iii) send recorded content to a smartphone or tablet or access recorded content from another digital video recorder, is not exempt because it is not solely used in the operation of commercial television transmission.
Traditional cable packages can range in price from $50 to more than $200 per month, making it one of the more expensive monthly utilities in your home, according to a 2019 blog post from the state Office of Consumer Affairs and Business Regulation.
Cable companies may include specific taxes, surcharges, and fees in their monthly bills in addition to content, equipment, and installation fees. On a website designed to help residents secure cable TV service, the state’s Department of Telecommunications and Cable states that these extra fees can significantly increase your monthly cost.
