- Overview - Sales Tax
- Overview - Use Tax
- Claiming the Bad Debt Reimbursement
- Exemptions from Sales/Use Taxes
- Payment of the Sales Tax
- Payment of the Use Tax
- Abatements/Amended Returns
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts References
Overview - Sales Tax
The Massachusetts sales tax is 6.25 percent of the sales price or rental charge of tangible personal property or certain telecommunications services sold or rented in the Commonwealth. (For a detailed definition of "sales price," please see M.G.L. Chapter 64H, Section 1 below). The sales tax generally is paid to the vendor as an addition to the purchase price. The buyer pays the sales tax to the vendor at the time of purchase; the vendor then remits the tax to the Commonwealth. For motor vehicle and trailer sales, however, the sales tax is paid directly to the Commonwealth by the purchaser. For more detailed information on motor vehicle sales taxes, see 830 CMR 64H.25.1: Motor Vehicles below.
In order to register, complete our online registration accessible from our MassTaxConnect home page. Businesses that register on or after September 1, 2003 must file returns and pay taxes electronically, regardless of the amount of their annual tax liability.
See the Department's E-filing and Payment Requirements to see if you are required to file and pay taxes electronically.
Overview - Use Tax
The Massachusetts use tax is 6.25 percent of the sales price or rental charge on tangible personal property (including mail order items or items purchased over the Internet) on which no sales tax, or a sales tax rate less than the 6.25 percent Massachusetts rate, was paid and which are to be used, stored or consumed in the Commonwealth. The use tax, unlike the sales tax, generally is paid directly to the Commonwealth by the purchaser.
If the Massachusetts sales or use tax due is not collected by the vendor, a purchaser owes use tax on the storage, use, or consumption of the tangible personal property in Massachusetts and must pay this directly to DOR. If you paid sales tax to another state on an item purchased in that state, you are entitled to a credit (up to 6.25%) against the Massachusetts use tax. The credit is granted for sales tax paid to another state if that state allows a corresponding credit for Massachusetts sales tax. For a list of reciprocal states and any limitations on the availability of the credit for sales tax paid to a specific state, please see below TIR 03-1, Exemption from Massachusetts Use Tax for Tax Paid Under Laws of Another State.
Claiming the Bad Debt Reimbursement
Massachusetts sales tax vendors who have remitted sales tax to DOR on accounts that are later determined to be worthless may file a claim for reimbursement with DOR. An account is determined to be worthless when it is written off as uncollectible for federal income tax purposes.
Reimbursements are paid annually without interest and may only be claimed on Form ST-BDR (or Form ST-BDR-Meals), Claim for Bad Debt Reimbursement. A claim for a vendor's prior fiscal year must be filed on or before the due date, including extensions, of the vendor's federal income tax return (or annual federal filing in the case of an exempt organization) for the prior fiscal year.
Vendors Are Not Allowed to Subtract Bad Debts from Gross Receipts:
Vendors must include in gross receipts for their Sales/Use Tax Returns, Sales Tax on Meals Returns and Sales/Use Tax on Telecommunications Services Returns all sales for the period in which the sales occur, regardless of whether payment has been received.
Any vendor who recovers, in whole or in part, a bad debt for which a reimbursement has been received must include the recovered amount in the gross receipts amount of the appropriate sales tax return covering the period in which the recovery occurs.
Documentation to Submit with Completed Form ST-BDR:
- if the federal income tax return is on extension, attach a copy of the appropriate federal application for extension form;
- document each worthless sale and provide an explanation listing the date the sale occurred, the amount of the sale, the buyer's federal identification number, (if available), and all facts pertinent to the determination that the account is worthless. vendors who are unable to separately document the portion of each worthless account which represents taxable Massachusetts sales may calculate the reimbursement on an aggregated basis. [TIR 92-2]
Note: If filing for Sales/Use Tax, as well as Sales Tax on Meals, complete two separate Forms (use the current period form only.)
Exemptions from Sales/Use Taxes
Massachusetts law exempts a number of items from the sales/use tax. The following categories of sales or types of transactions generally are exempted from the sales/use tax. For a complete list of exempt categories, see M.G.L. Chapter 64H, Section 6 and M.G.L. Chapter 64I, Section 7 below. If you have questions about whether certain items fit into these exempt categories, please call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
Sales of food products (groceries) for human consumption, other than meals sold by a restaurant, generally are tax-exempt. (M.G.L. c. 64H s. 6(h));
Sales of individual items of clothing costing $175 or less generally are exempt. Sales tax is due only on the amount over $175 per item. (M.G.L. c. 64H s. 6(k));
Periodicals such as newspapers and magazines generally are exempt. Newsletters, however, generally are not treated as newspapers and may be taxable. (M.G.L. c. 64H s. 6(m));
- Admission sales:
Sales of tickets to such activities as sporting and amusement events are exempt.
- Utilities and heating fuel sold to residential users, small businesses and certain industrial users:
Sales of gas, steam, electricity or heating fuel for residential purposes are exempt. Residential use includes use in any dwelling where people customarily reside on a long-term basis, whether or not the occupants of the dwelling are the purchasers of the fuel. Thus, residential use includes use in apartment buildings, rooming houses and nursing homes as well as use in single family or multifamily homes, but generally does not include use in hotels. Residential users are not required to present exemption certificates. (M.G.L. c. 64H ss. 6(i) and (j));
- Small Businesses:
Sales of gas, steam, electricity or heating fuel are exempt when sold to businesses with five or fewer employees. Businesses with multiple locations employing fewer than five people at any one location must use the total number of employees from all locations. Small businesses must present a Form ST-13, Small Business Energy Exemption Certificate, to the vendor to claim the exemption. Residential users are not required to present exemption certificates. (M.G.L. c. 64H s. 6(qq));
Sales of gas, steam, electricity or heating fuel to manufacturing facilities that use at least 75 percent of their energy in manufacturing or heating the manufacturing facility are exempt. Eligible industrial users must provide a Form ST-12, Exempt Use Certificate . (M.G.L. c. 64H ss. 6(i) and (j));
- Telecommunications services sold to residential users:
Sales of local residential telephone services billed on a recurring basis or for message unit charges are tax-exempt when provided to a residential purchaser, up to a total of $30 per month. Residential telephone service generally includes service provided to an individual for personal use at his or her residential address, including an individual dwelling unit such as an apartment. In the case of institutions where individuals reside, such as schools or nursing homes, telephone service is considered residential if it is provided to and paid for by an individual resident rather than by the institution. Telephone service provided to a business is not residential service even if the business is located in an individual's home. If an otherwise residential telephone is used for business purposes, the business must file a Form ST-10, Business Use Tax Return, and pay tax on the service that is used. Residential users are not required to present exemption certificates. (M.G.L. c. 64H s. 6(i));
- Personal or professional services:
Accounting, insurance, legal and medical services, as well as services such as haircuts and car repairs are not taxable. Please note: Items sold in addition to services, such as a bottle of shampoo from a salon or parts for a car repair, are taxable and must be itemized separately on the bill. Massachusetts tax law treats some products as services and therefore exempts them from the sales tax. Other products, however, may combine taxable and nontaxable elements. Still other products, although labeled custom or a service, may not meet the legal definition for tax purposes. ( 830 CMR 64H.1.1 Service Enterprises 7)
Payment of the Sales Tax
Vendors must complete and remit the appropriate sales and use tax return(s) to DOR, with payment in full, on or before the due date.
Filing Frequency And Payment Requirements:
Different schedules must be followed for filing and paying sales/use tax depending on the amount of tax vendors collect from their customers in a year. Filing and payment requirements based on annual collections:
- $100 or less: Payment and return due annually by the 20 th day of the month following the calendar year,
- $101 to $1,200: Payment and return are due quarterly by the 20 th day of the month following the calendar quarter, or
- $1,201 or more: Payment and return are due monthly by the 20 th day of the following month.
Note: As a result of the sales/use tax rate change on August 1, 2009, vendors who report on a quarterly or annual return will be required to file a sales/use tax return for a period that will include both sales before and sales after the rate change. Please see TIR 09-12, Reporting Rules for Quarterly and Annual Filers after Rate Changes in the Sales/Use Taxes, for detailed reporting requirements for the quarterly return for the period July 1, 2009 through September 30, 2009, and the annual return for the period January 1, 2009, though December 31, 2009.
Return Filing Methods:
MassTaxConnect or Form ST-9.
Electronically (ACH Credit or ACH Debit) or by check.
Please see Business Options: Electronic Filing and Payment Programs for more information on the various electronic payment and filing options.
- Business purchasers, who are registered or required to be registered as vendors, must report and pay any use tax due on its purchases together with any sales tax due on its sales via MassTaxConnect or on ST-9, Sales and Use Tax Return;
- Business purchasers, who are not registered vendors and are not required to be registered vendors, must file a Form ST-10, Business Use Tax Return, and pay the tax due on an annual basis. Form ST-10 is due with payment on or before April 15, for purchases made in the prior calendar year;
- Individual purchasers filing Form ST-11 must file, make payments and submit any amendment or abatement requests electronically. Form ST-11 is due with payment on or before April 15, for purchases made in the prior calendar year. Alternatively, individuals may report and pay use tax on their Massachusetts income tax return.
Boats, recreation vehicles, snow vehicles, motor vehicles, trailers, or other vehicles: the tax is reported and paid as follows:
- Boats, recreation or snow vehicles: the purchaser must file Form ST-6 by using the Online ST-6 Application and pay the use tax by the twentieth day of the month following the purchase, use, storage, or other consumption of such boat, recreation or snow vehicle within Massachusetts;
- Motor vehicles, trailers or other vehicles: a purchaser who is required to register or title the vehicle in Massachusetts, must, within ten days following the date of purchase, transfer or use of such vehicle within Massachusetts, file Form RMV-1, Application for Title and Registration , and pay any applicable sales or use tax to the Registrar of Motor Vehicles;
- Motor vehicles, trailers or other vehicles: a purchaser who is not required to register or title the vehicle in Massachusetts, must, by the twentieth day of the month following the date of purchase, transfer or use of such vehicle within Massachusetts, file a completed Form ST-7R, Motor Vehicle Certificate of Payment of Sales or Use Tax , and pay any applicable tax to the Department of Revenue or Registry of Motor Vehicles.
If a nonresident of Massachusetts purchases a motor vehicle in Massachusetts and takes title to and/or possession of the vehicle in Massachusetts, the sale is subject to the Massachusetts sales/use tax whether the nonresident intends to use the motor vehicle within or outside Massachusetts.
MassTaxConnect participants can use the “amend” feature to make changes to previously filed withholding, sales and use tax (including sales tax on meals) and room occupancy tax returns through their MassTaxConnect account. Business taxpayers can also use MassTaxConnect to dispute an audit finding or a penalty by choosing "File a Dispute" under "I Want To" in their account for each tax type.
Vendor, Not Purchaser, May Apply for an Abatement:
Massachusetts requires vendors to collect the sales/use tax, sales tax on meals and/or sales tax on telecommunications services. Because the vendor, and not the purchaser, actually pays over the tax to the Commonwealth, only the vendor is authorized to apply for an abatement of the tax. The purchaser may request a credit or refund from the vendor who should then file an abatement claim.
Claiming the Bad Debt Reimbursement
- copies of all invoices related to the Abatement/Amended Returns;
- copies of credit memos, or proof of refund/credit to customers;
- copies of the appropriate Exemption Certificate(s):
- Form ST-4, Sales Tax Resale Certificate
- Form ST-5, Sales Tax Exempt Purchaser Certificate
- Form ST-5C, Contractor's Sales Tax Exempt Purchase Certificate
- Form ST-12, Exempt Use Certificate
- Form ST-12B, Sales Tax Exempt Certificate For Sales of Certain Medical Equipment
- Form ST-13, Small Business Energy Exemption Certificate
- U.S. Department of State Tax Exemption Card [AP 102]
For United States and Commonwealth Of Massachusetts Government entities who do not present Form ST-5, Sales Tax Exempt Purchaser Certificate, a copy of the Government check or credit card sales receipt must be provided. [AP 101]
- M.G.L. Chapter 64H, Section 6
- 830 CMR 64H.6.5: Sales Tax on Meals
- TIR 09-12: Reporting Rules for Quarterly and Annual Filers after Rate Changes in the Sales/Use Taxes
- TIR 09-11: Change in Rate, Scope, and Computation of Sales/Use Taxes
- TIR 03-11: Expansion of Mandatory Electronic Filing
- TIR 99-9: Tax Treatment of Purchases with U.S. Government Bankcards
- AP 102: Diplomatic/Consular Exemptions
- AP 101: Exemption from Sales Tax
- M.G.L. Chapter 64H, Section 1
- M.G.L. Chapter 64I
- 830 CMR 62C.16.2 Sales and Use Tax Returns and Payments
- 830 CMR 64H.25.1: Motor Vehicles
- TIR 04-30: Revised Electronic Filing Requirements
- TIR 03-11 - Expansion Of Mandatory Electronic Filing
- TIR 03-1: Exemption from Massachusetts Use Tax for Tax Paid Under Laws of Another State
Exemptions from Sales/Use Tax
- M.G.L. Chapter 64H, Sections 1 and 6
- M.G.L. Chapter 64I, Section 7
- 830 CMR 64H.1.1 Service Enterprises
Payment of Sales/Use Tax
- M.G.L. Chapter 64H
- M.G.L. Chapter 64I
- 830 CMR 62C.16.2: Sales and Use Tax Returns and Payments
- TIR 04-30: Revised Electronic Filing Requirements
- TIR 03-11: Expansion of Mandatory Electronic Filing
Bad Debt Reimbursement
- M.G.L., Chapter 64H, Section 33 as amended by St. 1998, c. 485, ss. 20, 23
- TIR 00-3: Claiming the Bad Debt Reimbursement
- TIR 92-2: Claiming the Bad Debt Reimbursement
The language concerning due dates and the period covered by a claim was amended effective January 1, 1999. Since TIR 92-2 was issued on March 27, 1992, it does not reflect this change.
- I.R.C. § 166