Massachusetts adding to cable costs with tax on some boxes

By Colin A. Young

Bay State channel-surfers who buy, rent or lease a cable box from their television provider could soon see a change on their bills: state tax collectors confirmed last week that those transactions are now subjected to the state sales tax.

Revenue Commissioner Geoffrey Snyder signed a directive Friday declaring that the sale or rental of any cable box device that “can do more than connect a cable system to a TV broadcast receiver, and allow for parental controls” is no longer exempt from the state’s 6.25% sales tax. That means cable boxes that have DVR abilities or other common features like the ability to connect to popular streaming services are now subject to the tax.

In 2008, months before analog television was discontinued and as viewers were pushed to get cable packages or digital converter boxes to accommodate the new digital signal, DOR issued a directive that declared that “sales and rentals of cable television converter boxes to Massachusetts cable television customers are exempt from sales and use taxes” because they were deemed to fit into a statutory exemption for things “consumed or used directly and exclusively … in the operation of commercial … television transmission.”

But technology has changed, as has the way people watch television. Cable TV bundles are losing ground to streaming platforms and packages, and so-called smart TVs make it simple to surf the internet with a clicker. DOR said the cable converter boxes, set-top boxes and cable system terminal devices it considered when it issued the 2008 order were “only for the purpose of receiving programming or information from the cable provider, or for implementing parental controls.”

The Healey administration proposed eliminating the exemption in February and put a draft version of the directive it issued Friday out for comment from tax practitioners.

The editorial board of the Nashoba Valley Voice slammed the proposal in March, saying the addition of the sales tax will just push more people to cut the cable, “leaving the elderly and those less tech savvy to pay the price of a prying state bureaucracy.” The paper’s editorial board encouraged its readers to “flood that comments website and let the DOR know in no uncertain terms that they already pay more than enough for cable TV without tacking on a state tariff.”

The new official policy at DOR is 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 entitled to the exemption, as such Device is not used exclusively in the operation of commercial television transmission.”

“Specifically, a Device with additional features including, but not limited to, the ability to (i) schedule, record, locally store and play back recorded content for later viewing, (ii) access or run software applications such as web-based content streaming services, games, productivity tools, or other non-television applications, or (iii) transmit recorded content to a smartphone or tablet or access recorded content from another digital video recorder, is not exclusively used in the operation of commercial television transmission, and therefore is not exempt,” Snyder’s directive says.

The state Office of Consumer Affairs and Business Regulation said in a 2019 blog post that traditional “cable packages can cost anywhere from $50 to over $200 per month, making cable one of the higher monthly utilities in your home.”

“In addition to programming, equipment, and installation charges, cable providers may also assess certain taxes, surcharges, and fees as part of consumers’ monthly bills.  These additional charges can add a significant amount to your monthly bill,” the state’s Department of Telecommunications and Cable says on a webpage meant to assist residents with securing cable TV service.