- Use Tax on Out of State Purchases
- Voluntary Contributions
- Where to Report on Original Tax Return; What to Enclose
- Massachusetts References
- Prior Law, History of Payments
Use Tax on Out-of-State Purchases
A Massachusetts use tax of 6.25% is due on taxable purchases of tangible personal property purchased for use in Massachusetts on which no Massachusetts sales or use tax was paid. Purchases include, but are not limited to, purchases made out-of-state, on the Internet or from a catalog, where no Massachusetts sales tax was paid. Examples of taxable items include antiques, appliances, artwork, books, carpet, CDs and DVDs, computers, electronics, furniture, jewelry, software, video games and any other item that is not exempt.
The Massachusetts use tax is 6.25 percent of the sales price or rental charge of tangible personal property on which no Massachusetts sales tax was paid, where the property was purchased to be used, stored or consumed in the Commonwealth.
The use tax does not apply where Massachusetts sales tax has been collected or where the transaction is exempt from sales or use tax by statute (e.g., an item of clothing with a sales price of $175 or less is exempt).
Tangible personal property need not be used exclusively or even primarily within Massachusetts for the use tax to apply. Tangible personal property delivered, shipped, or brought into Massachusetts within six months after purchase is presumed to be purchased for use, storage, or other consumption in Massachusetts until the contrary is established. A taxpayer can rebut this statutory presumption by presenting sufficient evidence to establish that the property shipped or brought into Massachusetts was not purchased for storage, use or other consumption in Massachusetts.
Credit for Tax Paid to Other States:
Generally, a taxpayer who pays a sales or use tax to another state or territory of the United States on merchandise to be used in the Commonwealth is entitled to a credit against the Massachusetts use tax up to the amount of the 6.25 percent Massachusetts sales and use tax. The credit is allowed for sales or use tax paid to another state only if that state has a corresponding credit similar to the Massachusetts credit.
- Method #1 for residents, by completing the Form 1, Line 33 Worksheet - Use Tax Due on Out-of-State Purchases for all purchases;
- Method #1 for part-year residents, by completing the Form 1-NR/PY, line 38 Worksheet - Use Tax on Out-of-State Purchases on purchases made while a Massachusetts resident for all purchases;
- Method #2 for residents and part-year residents, by using the alternative method based on a "safe harbor" amount of use tax for purchases of items with a sales price less than $1,000. if this method is used, taxpayers must still fill out the worksheets for purchases of items over $1,000;
- Method #3 for residents and part-year residents, by filing a Form ST-11, Individual Use Tax Return .
Note: Use tax does not apply to nonresidents.
Method #2 - Alternative "Safe Harbor" Method of Filing:
Taxpayers may use a schedule to identify a "safe harbor" amount of use tax that they can self-assess when filing their income tax returns. The schedule is based on the taxpayer's Massachusetts adjusted gross income. This method can be used in lieu of computing the actual amount due with respect to such purchases on the Form 1, line 33 or Form 1-NR/PY, line 38 worksheet. Taxpayers electing to satisfy a use tax liability by estimating it shall calculate the liability in accordance with the schedule below. This method, however, only applies to purchases of items with a sales price less than $1,000.
|MA AGI Per Return:||Use Tax Liability|
|$0 - $ 25,000||$0.00|
|$25,001 - $ 40,000||$20.00|
|$40,001 - $ 60,000||$31.00|
|$60,001 - $80,000||$44.00|
|$80,001 - $100,000||$56.00|
|Above $100,000||Multiply MA AGI by .000625|
Purchases of Items with a Sales Price of $1,000 or more:
The estimated liability is only applicable to purchases of any individual item having a total sales price of less than $1,000. These purchases are not part of the safe harbor estimate and must be calculated separately For each taxable item purchased at a sales price of $1,000 or greater, the actual use tax liability for each purchase must be added to the amount of the estimated liability derived from the above table.
Example: Massachusetts adjusted gross income = $55,000
|"safe harbor" amount from schedule||= $31|
|New stove = $2,600 x .0625||= $163|
|Total Use Tax||= $194|
Taxpayers may contribute any amount they choose to one or more charities directly on their Massachusetts tax returns. These amounts are added to the tax. They increase the amount of payment or reduce the amount of refund.
Voluntary contributions to the following fund will not change the tax or reduce a refund:
(This election is made on page 1 of the tax return, above the Filing Status line)
- Massachusetts State Election Campaign Fund provides limited public financing for campaigns of eligible candidates for statewide and elective office. A taxpayer, and spouse if filing jointly, may voluntarily contribute $1 each to this fund.
Voluntary contributions to the following four funds will either increase a tax liability or decrease a refund:
(These elections are made on page 3 of the tax return, below Income Tax after Credits line)
- Endangered Wildlife Conservation: The Natural Heritage and Endangered Species Fund is administered by the Division of Fisheries and Wildlife. Contributions to this Fund are used to protect and restore rare and endangered wildlife and plants, and their habitats. The Fund has helped restore and conserve in the Commonwealth populations of Bald Eagle, Hessel's Hairstreak Butterfly, the Redbelly Turtle and the Plymouth Gentian;
- Organ Transplant Fund is administered by the Massachusetts Department of Public Health. Contributions to this Fund assist patients with the costs of medications without which they might lose their transplanted organs;
- Massachusetts AIDS Fund is administered by the Massachusetts Department of Public Health. Contributions to this Fund are used for research, experimental treatment and education related to Acquired Immune Deficiency Syndrome (AIDS). Massachusetts residents living with AIDS receive experimental treatment through clinical trials which are wholly supported with this Fund. The Fund also educates people with AIDS about treatment options and how to gain access to medication and experimental treatment;
- Massachusetts United States Olympic Fund. Contributions to this fund assist Massachusetts residents in paying all or part of any costs associated with the development, maintenance and operation of the U.S. Olympic Team participating in the Olympics and the United State Paralympic Team participating in the Paralympics; and
- Massachusetts Military Family Relief Fund. Recent legislation enables taxpayers to make voluntary contributions on their Income tax returns to the newly established Massachusetts Military Family Relief Fund. This fund is administered by the Friends of Massachusetts National Guard and Reserve Families. Contributions to this fund are used to help members of the Massachusetts National Guard and Massachusetts residents who are members of the reserves of the armed forces of the United States and who have been called to active duty after the September 11, 2001 terrorist attacks, and their families, to defray the costs of food, housing, utilities, medical services, and other expenses.
Caveat: for these four funds, if the return shows a net tax due, the voluntary contributions may be made only if paid in full along with the net tax due when the return is filed.
All of the following filing methods allow for voluntary contributions:
- Electronic Filing;
- Online Filing; and
- Paper - Form 1 and Form 1-NR/PY.
Receipts for Voluntary Contributions to Charitable Funds:
Copies of tax returns serve as receipts of contribution to the designated charity since returns are signed under penalties of perjury. If taxpayers request receipts for voluntary contributions, they should mail in or fax to CSB signed requests and CSB will provide line item detail verification of any contribution(s) made on their tax returns. Taxpayers may request receipts of tax returns that were changed during processing.
DOR Adjustment issues:
If there is an increase in liability at the time the return is posted, the voluntary contributions will be reduced to reflect the increase. If there is a decrease in liability, the amount of voluntary contribution remains the same, and the balance is refunded.
The priority for applying an overpayment is as follows:
- credit forward to the estimated tax account;
- voluntary contributions;
If there is an overpayment that is sufficient to cover only a portion of the entire contribution designated on the tax return, the following order would apply:
- Organ Transplant;
- AIDS Fund;
- Olympic Fund;
- Military Fund.
Examples of voluntary contributions with a change in tax in processing:
1. Return shows $70 overpayment:
$50 for voluntary contributions;
$20 requested refund.
DOR reduces overpayment from $70 to $60.
Result: $50 is applied to the designated charities in priority order and refund is reduced to $10.
2. Return shows $170 overpayment.
$150 for voluntary contributions;
$20 requested refund
DOR reduces overpayment from $170 to $150.
Result: $150 is applied to the designated charities and the refund is reduced to $0.
3. Return shows $90 overpayment.
$70 for voluntary contributions;
$20 requested refund
DOR reduces overpayment from $90 to a tax due of $30.
Result: $70 contribution is reduced to $0. No overpayment, no contribution and taxpayer is billed for $30.
4. Return shows $120 overpayment:
$40 overpayment applied to the following year estimated tax account;
$50 listed as voluntary contributions;
$30 requested refund.
DOR reduces overpayment from $120 to $50.
Result: $40 overpayment is applied to the following year estimated tax account and the remaining $10 is applied to the designated charities. There will be no refund.
5. Taxpayer pays $110 with return:
$80 for net tax due;
$30 listed as voluntary contributions.
DOR increases net tax due to $90
Result: $10 for voluntary contributions is applied to increase in net tax due. Remaining $20 is applied to the designated charities.
for Use Tax, out-of-State Purchases - 3 methods
- Method #1 for residents must complete the Form 1, Line 33 Worksheet - Use Tax Due on Internet, Mail Order and Other Out-of-State-Purchases, 2013 Form 1 Instructions, Page 14 for all purchases. If there is a tax due, enter the amount from Line 4 of the worksheet on Form 1, Line 33.
- Method #1 for part-year residents who are taxed on purchases made while a Massachusetts resident must complete the Form 1-NR/PY, Line 38 Worksheet - Use Tax Due on Internet, Mail Order and Other Out-of-State Purchases, 2013 Form 1-NR Instructions, Page 18 file size 1MB . If there is a tax due, enter the amount from Line 4 of the worksheet on Form 1-NR/PY, Line 38.
- Method #2 for residents using the alternative "safe harbor" method. For purchases with a sales price of less than $1,000, they may self-assess by using the "safe harbor" schedule found in the 2013 Form 1 Instructions, Page 14 . They must report purchases of items with a sales price of $1,000 or more on the Form 1, Line 33 Worksheet - Use Tax Due on Internet, Mail Order and Other Out-of-State-Purchases, 2013 Form 1 Instructions, Page 14 . If there is a tax due, enter the combined amount from Line 4 of the worksheet plus the self-assess amount on Form 1, Line 33.
- Method #2 for part-year residents using the alternative "safe harbor" method who are taxed on purchases made while a Massachusetts resident. For purchases with a sales price of less than $1,000, they may self-assess by using the "safe harbor" schedule found in the 2013 Form 1-NR/PY Instructions, Page 18 file size 1MB . They must report purchases of items with a sales price of $1,000 or more on the Form 1-NR/PY, Line 38 Worksheet - Use Tax Due on Internet, Mail Order and Other Out-of-State Purchases, 2013 Form 1-NR Instructions, Page 18 file size 1MB . If there is a tax due, enter the combined amount from Line 4 of the worksheet plus the self-assess amount on either Form 1, Line 33 or Form 1-NR/PY, Line 38.
- Method #3 for both residents and part-year residents using Form ST-11. They must complete and submit a Form ST-11, Individual Use Tax Return .
for Voluntary Contributions
- Enter the amounts on either Mass Form 1, Line 32 or Form 1-NR/PY, Line 37.
- M.G.L. Chapter 62, Sections 6C - 6E; 6G - H
- M.G.L. Chapter 62C, Section 16(i)
- M.G.L. Chapter 64I, Sections 1, 4A as added by St. 2004, c. 262, s. 52, 2, 7, 8
- TIR 04-26: Sales/Use Tax Changes Contained in Chapter 262 of the Acts of 2004
- TIR 03-03: Alternative Individual Use Tax Return: New Line Item on Personal Income Tax Return
- TIR 03-01: Exemption from Massachusetts Use Tax for Tax Paid under Laws of Another State
- DOR Publication: Should You Be Paying Use Tax on Out-of-State/Foreign Purchases?