- Common Sales/Use Tax Questions
- Tax-Exempt Items
- Filing and Payment Information
- Massachusetts Sales/Use Tax Collection Schedule (PDF)
This guide contains general information regarding the Massachusetts sales and use tax. It describes the tax, what types of transactions are taxable and what both a buyer and seller must do to comply with the law.
A Guide to Sales and Use Tax is designed to lead you through the basics of sales and use tax by answering many frequently asked questions. The guide also includes a general listing of those items that are exempt from the Massachusetts sales and use tax.
This guide is part of an ongoing series of publications that the Massachusetts Department of Revenue (DOR) has issued to inform the public of various aspects of Massachusetts taxes. Please feel free to call DOR if you have any further questions about the sales and use tax or any other aspects of the Commonwealth's tax system.
What is the sales tax?
The Massachusetts sales tax is 6.25 percent of the sales price or rental charge of tangible personal property (including gas, electricity and steam) 1 or certain telecommunications services 2 sold or rented in the Commonwealth. (For a detailed definition of "sales price," please see M.G.L. Ch. 64H sec. 1.) 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, please see 830 CMR 64H.25.1 or call DOR's Contact Center Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
The Massachusetts use tax is 6.25 percent of the sales price or rental charge on tangible personal property 1 (including phone and mail order items or items purchased over the Internet) or certain telecommunications services 2 on which no sales tax, or a sales tax rate less than the 6.25 percent Massachusetts rate, was paid and which is 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.
Example: You purchase furniture for your Massachusetts business or residence from an out-of-state firm and pay no Massachusetts sales tax. You're required to pay the 6.25 percent Massachusetts use tax. The use tax applies because the furniture wasn't subject to a sales tax in the other state and because it's for use in the Commonwealth.
2. Telecommunications services include telephone and other transmissions of information (such as beeper services, cellular telephone services and telegram services). Cable television and Internet access are exempt from the sales tax. Generally, the tax on the sale or use of telecommunications services is a tax on the transmission of messages or information by various electronic means, but not on the sale or use of information itself. For a list of taxable telecommunications services, see TIR 05-8, Taxation of Internet Access, Electronic Commerce and Telecommunications Services: Recent Federal Legislation.
Who is a sales/use tax vendor?
A sales/use tax vendor is a retailer or any other person who regularly sells, rents or leases tangible personal property or telecommunications services that are subject to the Massachusetts sales tax. A vendor is anyone who:
- Sells, rents or leases in Massachusetts generally;
- Purchases tangible personal property or telecommunications services for resale in Massachusetts;
- Acquires parts to manufacture goods for sale or resale in Massachusetts;
- Has a business location in Massachusetts;
- Has representatives soliciting orders for tangible personal property or telecommunications services within Massachusetts; or
- Sells to Massachusetts residents or businesses and delivers, repairs or installs goods or telecommunications services within the Commonwealth.
Please note: Tax-exempt organizations that sell tangible personal property or telecommunications services in the regular course of business are considered vendors and are required to collect sales/use tax.
What are the responsibilities of a sales/use tax vendor?
Massachusetts sales/use tax vendors are responsible for:
- Registering with DOR to collect sales/use tax;
- Collecting the 6.25 percent sales/use tax on taxable sales or rentals of tangible personal property or telecommunications services. Please note: The tax must be separately stated and separately charged on all invoices, bills, displays or contracts; and
- Remitting all sales/use taxes to DOR with the appropriate Massachusetts sales/use tax return on time. (For a complete listing of forms, please see the Online Forms Index.)
Are out-of-state vendors' responsibilities the same as in-state vendors' responsibilities?
Yes. Out-of-state vendors who meet any of the vendor definitions listed previously generally have the same responsibilities as Massachusetts vendors.
How does a vendor register to collect sales/use tax?
Vendors must register to collect Massachusetts sales/use tax online through DOR's MassTaxConnect application.
After registering with DOR, vendors will be issued a Sales and Use Tax Registration Certificate (Form ST-1) for each business location. Form ST-1 must be displayed in a conspicuous location on the business premises, so that it is easily visible to customers.
As a convenience to customers, those out-of-state retailers and mail order firms that aren't required by law to register as Massachusetts vendors may register voluntarily to collect use tax.
Yes. A cigarette retailer must be registered for sales tax, as sales of cigarettes are subject to the sales tax. In addition, a cigarette retailer must have a Massachusetts cigarette retailer's license. The Application for Cigarette Retailer's License must be filed online via MassTaxConnect. A cigarette retailer also should check with its local Board of Health if a local tobacco sales permit is required..
Retailers of tobacco products (cigarettes, cigars, smoking tobacco, and smokeless tobacco) must prepay sales tax on such products to their suppliers. Tobacco retailers must continue to collect and remit sales tax on their sales of tobacco products and may take credit on their sales tax return in the amount of the prepaid sales tax paid to their suppliers. Wholesalers of tobacco products must collect and remit sales tax on their sales to retailers and report these sales as taxable sales on their sales tax return. See TIR 08-9, TIR 08-13, TIR 08-16 and TIR 08-17 for more information.
Must an individual or business register to pay sales/use tax on occasional out-of-state purchases?
No. People who aren't registered to collect sales/use tax in Massachusetts, and who make an occasional out-of-state purchase for business or personal use, don't need to register. They instead must pay their use taxes by filing either a Business Use Tax Return (Form ST-10 ) or an Individual Use Tax Return (MassTaxConnect). For their convenience, individuals may report and pay any Massachusetts use tax due on their personal income tax return, Massachusetts Resident Tax Return (Form 1), (Form 1-NR/PY for part-year residents). Taxpayers have the option of using a schedule to self-report an estimated, or "safe harbor," amount of use tax based on their Massachusetts adjusted gross income. Purchases of items having a sales price of $1,000 or more are excluded from the "safe harbor." For more information, please see TIR 04-26, Sales/Use Tax Changes Contained in Chapter 262 of the Acts of 2004.
Generally, anyone who pays a sales or use tax (which is legally due without any right to a refund or credit) to another state on merchandise or telecommunications services to be used in the Commonwealth is entitled to a credit against the Massachusetts use tax - up to the 6.25 percent Massachusetts sales/use tax rate. This credit is granted for sales tax paid to another state only if that state has a reciprocal agreement with Massachusetts; each state gives credit to purchasers for sales tax paid to the other state. If a sales tax rate of less than 6.25 percent is paid to the other state, the Massachusetts use tax is the difference between the two states' sales tax rates. If a sales or use tax is paid to a state that doesn't have a reciprocal agreement with Massachusetts, then the sales/use tax credit does not apply.
Massachusetts has sales tax exemption agreements with most states. Some states, however, have only limited agreements with the Commonwealth. If you need more detailed information about a specific state, see TIR 03-1, Exemption from Massachusetts Use Tax for Taxes Paid Under Laws of Another State, or call DOR's Contact Center Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
Example: State X imposes a sales/use tax of 4 percent and has a reciprocal sales/use tax agreement with Massachusetts. You purchase a camera in State X for use in your Massachusetts business. You pay $1400 plus $56 tax for the camera. Since State X has a sales tax rate less than the 6.25 percent Massachusetts rate, you owe a use tax in Massachusetts of $31.50 - $87.50 (6.25 percent Massachusetts sales tax obligation) minus $56 (4 percent State X sales tax payment).
How is the sales/use tax paid on boats or motor vehicles?
The sales tax on boats and recreational vehicles purchased from a Massachusetts dealer is collected by the dealer at the time of sale. For casual sales, the sales/use tax is due prior to registration or by the twentieth day of the following month, whichever occurs earlier. The sales/use tax on boats and other recreational vehicles must be filed and paid electronically via DOR's online ST-6 application.
The confirmation page received after the tax has been filed and paid is required in order to register the boat or recreational vehicle. The purchaser of a motor vehicle or trailer that is required to be registered or titled in Massachusetts must file Form RMV-1, Application for Title and Registration, and pay the sales/use tax in full with the Registry of Motor Vehicles within 10 days of the date of purchase, transfer or first use of the motor vehicle or trailer. The purchaser of a motor vehicle or trailer that isn't required to be registered in Massachusetts, including motor vehicles and trailers that are purchased in Massachusetts by nonresidents who will register or title the motor vehicle or trailer outside of Massachusetts, must file Form ST-7R , Certificate of Payment of Sales or Use Tax, and pay the sales tax in full with DOR or the Registry of Motor Vehicles on or before the twentieth day of the month following the month of purchase, transfer or first use of the motor vehicle or trailer.
What types of sales are exempt from the sales/use tax?
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 information on the status of individual items, please refer to "What Specific Items Are Exempt from the Sales/Use Tax?" 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 and clothing:
Sales of food for human consumption, other than meals sold by a restaurant, generally are tax-exempt. Sales of individual items of clothing costing $175 or less also generally are exempt. (Sales tax is due only on the amount over $175 per item.)
Sales of periodicals:
Periodicals such as newspapers and magazines generally are exempt. Newsletters, however, generally are not treated as newspapers and may be taxable.
Sales of tickets to such activities as sporting and amusement events are exempt.
Sales of utilities and heating fuel 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.
Sales of utilities and heating fuel also are exempt when sold to businesses with five or fewer employees and gross income of less than $1 million, or to manufacturing facilities that use at least 75 percent of their energy in manufacturing or heating the manufacturing facility. 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 Small Business Energy Exemption Certificate (Form ST-13 ) to the vendor to claim the exemption. Eligible industrial users must provide an Exempt Use Certificate (Form ST-12 ). Residential users are not required to present exemption certificates.
Sales of telephone services 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 Business Use Tax Return (Form ST-10 ) and pay tax on the service that is used. Residential users are not required to present exemption certificates.
Sales of transportation:
These services generally are not taxed. For example, a separately stated transportation charge for shipping by a common carrier is exempt if the transportation occurs after the sale of the property. For more information about shipping and handling charges, see DOR Directive 04-5, Sales Tax on Transportation Charges.
Charges for 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.
Service providers who have questions about the taxability of their transactions should refer to 830 CMR 64H.1: Services Enterprises or contact DOR's Rulings and Regulations Bureau for clear guidance on this issue by writing to: Department of Revenue, Rulings and Regulations Bureau, PO Box 9566, Boston, MA 02114-9566.
Casual and isolated sales:
Infrequent and nonrecurring transactions made by people or businesses not regularly engaged in the business of making such sales are exempt. For example, sales of used appliances by a homeowner or sales at infrequent yard sales are exempt.
Please note: Generally, casual sales of cars, boats or trailers are taxable, except for certain family transactions. For more detailed information on casual and isolated sales, see DOR Regulation 830 CMR 64H.6.1.
Sales where the purchaser intends to resell the item or telecommunications services in the regular course of business are exempt. In these cases, a Sales Tax Resale Certificate (Form ST-4 ) must be given to and retained by the seller as proof the sale was exempt for the reasons stated on the certificate. Vendors can confirm the validity of their customers' sales and use tax registration and resale certificates online through DOR's Sales Tax Resale Certificate Verification System.
Please Note: Sales Tax Resale Certificates are invalid for the sale or purchase of tobacco products. See cigarette retailer information in the guide.
Sales for out-of-state delivery:
Sales where the purchaser accepts title to and possession of an item outside Massachusetts generally are exempt. Similarly, if a vendor is obligated to deliver to an out-of-state purchaser's address or to an interstate common carrier for such a delivery, the sale is not taxable in Massachusetts. Generally, however, any taxable item brought into the state within six months of purchase for use, storage or consumption in Massachusetts s subject to the use tax.
Massachusetts sales and use tax law generally requires a business with nexus in Massachusetts to collect tax when it ships goods to a consumer in Massachusetts on behalf of a retailer that is not required to collect the tax because it does not have nexus with Massachusetts. For a detailed explanation of the rules regarding drop shipment transactions, see TIR 04-26, Sales/Use Tax Changes Contained in Chapter 262 of the Acts of 2004.
Sales to exempt organizations:
Sales to organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code (such as charitable and nonprofit organizations), as well as sales to agents of Section 501(c)(3) organizations, generally are exempt. To obtain the exemption, the purchaser, or its agent, must provide the vendor with a signed copy of a Sales Tax Exempt Purchaser Certificate (Form ST-5 ) or Contractor's Sales Tax Exempt Purchase Certificate (Form ST-5C ) and a copy of the organization's Certificate of Exemption (Form ST-2) issued by DOR. The vendor must ensure that this form is complete and retain it to prove the sale was exempt. Otherwise, the sales tax may be assessed against the vendor.
Sales to government agencies:
Sales made directly to federal and Massachusetts state or municipal government agencies or entities are exempt. To qualify, the agency must be a regular department of government or an entity wholly owned by the government that performs governmental duties on an exclusive basis.
Additionally, sales of tangible personal property, including meals, to agents of governmental entities, are exempt, provided certain requirements are met. See TIR 99-4, Sales and Use Tax Exemptions: Agents of Exempt Entities, and Regulation 830 CMR 64H.6.5, Sales Tax on Meals, for rules for substantiating exempt purchases.
Sales to certain contractors and subcontractors:
Sales of tangible personal property for use in fulfilling government public works projects to certain contractors and subcontractors acting as agents for governmental entities are exempt. To claim the exemption, the contractor or subcontractor must provide the vendor with a signed copy of a Contractor's Sales Tax Exempt Purchase Certificate (Form ST-5C ), and a copy of the government agency's Certificate of Exemption (Form ST-2) issued by DOR. Contractors and subcontractors must indicate on the face of Form ST-5C that they are claiming the exemption for property used to fulfill a contract to provide qualified services in a public project.
Additionally, under a recently announced change in policy, sales of materials, tools, fuel, machinery and replacement parts, to contractors for one of the exempt uses described in G.L. 64H, §§ (r) or (s) (e.g., manufacturing, research and development, agricultural production) are exempt, without regard to whether the contractor is purchasing as a agent of the party that will use these items in the manner exempted by these provisions. Contractors purchasing qualifying property under these provisions may do so by presenting an Exempt Use Certificate (Form ST-12 ), to their vendors. Such contractors bear the burden of proof of showing on an audit that the items purchased are or will be used in an exempt manner. In the event that the items do not qualify for the § 6(r) or §6(s) exemption, a contractor will be liable for the tax. For more information, see Directive 07-6, Exemptions Under G.L. c. 64H, § 6(r) and § 6(s).
Sales to manufacturers:
Sales of materials, tools, fuel, machinery and replacement parts that will be used directly and exclusively in the actual manufacture, processing or conversion of tangible personal property to be sold, including the publishing of a newspaper or the operation of commercial radio broadcasting or television transmission, are exempt in many cases. In addition, sales of materials, tools, fuel, machinery and replacement parts that are consumed and used directly and exclusively in research and development by a manufacturing corporation or a research and development corporation generally are exempt. (For information regarding the qualifications of a research and development corporation, see TIR 04-15, Amendments to Massachusetts Corporate Excise Governing Domestic and Foreign Manufacturing Corporations and Research and Development Corporations, which is available on the DOR website at www.mass.gov/dor, or by calling DOR's Rulings and Regulations Bureau at 617-626-3250.) The vendor must receive from the purchaser an Exempt Use Certificate (Form ST-12) and maintain proper records on such sales.
Please note: Because of the complexity of the law, some guidelines listed here may not apply to every transaction. To avoid any interest or penalty charges on tax that was not collected properly, taxpayers with questions about the taxability of any sale should call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089 or request a letter ruling by writing to: Department of Revenue, Rulings and Regulations Bureau, PO Box 9566, Boston, MA 02114-9566.
What specific items are exempt from the sales/use tax?
The following lists detail the tax status of a number of specific items in the following categories: apparel and fabric goods; food and meals; health care items; home and household items; and reading materials and stationery.
These lists are intended to address only the most frequently asked sales/ use tax questions. For more information on the tax status of an item not specifically mentioned, please call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
Clothing generally is exempt from the sales tax. However, any individual clothing item costing more than $175 is taxable on the amount over the basic exemption. Thus, the tax on a $200 suit would be $1.56 - 6.25 percent of the $25 taxable amount. If a number of items are being purchased, any applicable sales tax is charged only on individual items over $175, no matter what the total bill.
While apparel designed solely for athletic or protective use is taxable, items that are also suitable for everyday use are exempt.
Materials that become part of articles of clothing, such as name tags sewn to a garment, are generally tax-exempt. Jewelry and accessories generally are taxable.
Following is the specific item list:
- Aprons: household, shop
- Bathing suits
- Belts, buckles, suspenders
- Children's novelty costumes
- Choir, clerical vestments
- Cloth: synthetic or natural fiber
- Footwear: Boat shoes; Innersoles; Jogging shoes; Overshoes; Sandals; Shoelaces; Shoes and boots; Slippers; Sneakers and tennis shoes
- Gloves: dress, casual, gardening
- Gym uniforms
- Hats, caps, earmuffs
- Hosiery, socks, garters and garter belts
- Jackets, windbreakers
- Jogging bras
- Leotards, tights
- Neckwear, ties, scarves
- Sewing goods: Buttons; Elastic binders, tapes; Fabric and materials for clothing; Thread; Yarn (other than rug); Yarn goods; Zippers
- Ski pants
- Tennis clothing
- Uniforms: band; camping; fire; nurse; police; waiter/waitress
- Work clothes
- Bathing and shower caps
- Clothing primarily designed to protect from physical injury (see DOR Directive 99-3)
- Equipment, special clothing for jockeys
- Footwear: Bowling shoes; Cleated athletic shoes; Football shoes; Golf shoes; Riding boots; Shoe bags, trees; Shoe polish, brushes; Ski boots; Waders
- Hair notions (barrettes, combs and brushes, etc.)
- Handbags, purses
- Protective helmets
- Sewing supplies: Dress forms, patterns; embroidery hoops; Knitting bags; Needles, pins, thimbles; Needlework instruction books; Rug yarn; Scissors; Sewing kits; Skein and yarn holders; Tape measures
- Uniforms: athletic (baseball, football, etc.)
In general, food products for human consumption are exempt from sales tax. Food items purchased with federal food stamps are also exempt from the sales tax. Questions sometimes arise as to whether an item is considered to be an exempt food; below is a list of commonly questioned items:
- Breath-freshening candies
- Dietetic candies
- Edible oils
- Food oils
- Food substitutes
- Salt and sugar substitutes
- Nonmedicated cough drops
- Dietary supplements
- Vitamins and food supplements
- Weight-loss aids and preparations
Food or beverages prepared for human consumption and provided by a restaurant or restaurant part of a store are taxable as "meals." Such food or beverages sold on a "take out" or "to go" basis are also taxable. However, bakery products sold in units of six or more for take out and snacks or candy sold through a vending machine or "honor snack tray" for less than $3.50 are exempt.
The following operations, whether they stand alone or are part of another business activity, are considered restaurants and are required to collect the sales tax on meals:
- Canteen trucks or wagons
- Catering businesses
- Cocktail lounges and bars
- Coffee shops
- Dining rooms
- Hotel and motel dining rooms
- Ice cream trucks and other food stands
- Lunch counters
- Private or social clubs
- Snack bars (including theatre snack bars) and salad bars
- Street wagons or carts
- Vending machines or "honor snack trays" that sell snacks or candy with a sales price of $3.50 or more. Honor snack trays consist of any vending arrangements in which snacks or candy are available in an open tray for employees in an establishment that normally does not sell food and for which payment is made on the honor system.
For more detailed information about the sales tax on meals, please see DOR Regulation 830 CMR 64H.6.5, Sales Tax on Meals. A Guide to Sales Tax on Meals also contains information about the sales tax on meals.
The tax status of health care items and equipment generally is determined by explicit statutory reference. A guide to this area is provided below:
- Abdominal belts
- Baby oil
- Baby pants
- Braces, supports and corrective devices fit to the patient
- Breast pumps (on prescription only)
- Colostomy and lleostomy bags, pouches and solutions
- Crutches, crutch cushions and tips
- Diaper linings
- Hearing aid batteries
- Hearing aids worn on the body
- Eyeglasses (prescription only)
- Incontinence pants
- Over-the-counter medications sold on prescription
- Oxygen, blood and blood plasma
- Prescription drugs
- Sanitary napkins and belts
- Syringes and needles (with insulin prescription)
- Adhesive tape
- Athletic supporters
- Baby lotions and powders
- Bandages and bandage scissors
- Bed pans
- Bedwetting alarm devices
- Blood diagnostic products
- Breast pumps (if no prescription)
- Cotton balls
- Cotton swabs
- Deodorants, antiperspirants
- Finger cots
- Heating pads
- Hot water bottles
- Ice bags
- Invalid cushions and rings
- Lamps: heat and sun
- Nonprescription medicine
- Over-the-counter medications not sold on prescription
- Powders, deodorant, douches
- Pregnancy test systems
- Prosthesis powder and shampoo
- Supports: ankle and wrist
- Syringes (except with insulin prescription)
- Weight-loss aids and preparations
Rentals, sales and repairs of the following are exempt only when prescribed by a registered physician:
- Alternating pressure pad units
- Canes, tripod canes
- Enteral, parenteral feeding devices worn on the body
- Hospital beds for home use
- Kidney dialysis machines (see DOR Letter Ruling 02-6)
- Life sustaining resuscitators
- Oxygen concentrators, masks, humidifiers, etc.
- Patient lifts
- Suction machines, including breast pumps
- Ultrasonic nebulizers
Household items generally are taxable. Seeds used to grow food for human consumption are exempt. Here is a listing of the tax status of specific items:
- Commercial gun safes and trigger lock devices
- Flags: U.S. only
- Fuels: Charcoal; Combustible fireplace logs; Firewood, kindling; Lighter fluid for grills; Propane gas for grills
- Gas, steam, electricity and heating fuel
- Infant supplies: Baby buntings; Bibs; Diapers: cloth and disposable; Linings; Receiving blankets; Rubber pants
- Plants and seeds that produce food for human consumption
- Telecommunications services (up to $30 per month for residential use)
- Building materials
- Furniture and draperies
- Hobby supplies
- Hoses and sprinklers
- Infant supplies: Baby harnesses; Carriages, strollers; Car seats, restraints; Changing tables; Cribs and crib blankets; Diaper bags; Nursing bottles, nipples; Teething items; Wipes
- Lawn furniture
- Lawnmowers, spreaders, sweepers
- Paint and painting supplies
- Peat moss
- Pesticides, including insecticides, herbicides, fungicides, and miticides. (These products are now generally taxable unless purchased by an applicator licensed or certified by the Department of Agricultural Resources or are used in agricultural production. See TIR 08-8 for more information.)
- Plants and seeds that do not produce food for human consumption
- Potting soil, grass, shrubs
- Shovels and rakes
Equipment directly related to solar, wind-powered or heat-pump systems is exempt if the system is used as a primary or auxiliary power system for heating or supplying the energy needs of a taxpayer's principal residence in Massachusetts. Structural components, such as glass windows, are taxable unless they meet DOR's definition of custom-made.
Please note: Massachusetts also allows owners or tenants of residential property located in the Commonwealth a credit against their personal income tax for expenses related to renewable energy source property. To take the credit, taxpayers must complete and file Massachusetts Schedule EC, Solar and Wind Energy Credit, with their annual income tax returns.
Generally, reading materials and stationery are taxed. Exemptions are allowed by statute for newspapers, magazines, books used for religious worship and educational textbooks. Following is a list of specific items:
- Bibles, Korans, etc.
- Books required by educational institutions for instruction
- Magazines, newspapers and comic books
- Prayer books and missals
- Books and paperbacks
- Dictionaries and encyclopedias
- Greeting cards
- School supplies
- Stationery and paper goods
What is the schedule for filing and paying sales/use tax?
Different schedules must be followed for filing and paying sales/use tax depending on the amount of tax vendors expect to collect from their customers in a year. The following chart lists the filing and payment requirements.
|Annual sales/use tax collected||Return filing requirement||Payment due|
|$100 or less||Annually due 20 days after the end of the filing period - i.e., Jan. 20.|
MassTaxConnect or Form ST -9
|Payment due with return.|
|From $101 up to $1,200||Quarterly due 20 days after end of the filing period - i.e., April 20, July 20, October 20 and January 20.|
MassTaxConnect or Form ST-9 (for goods); Form STS (for services)
|Payment due with return.|
|$1,201 or more||Monthly due 20 days after end of the filing period - i.e., February 20 for January filing period.|
MassTaxConnect or Form ST-9 (for goods); Form STS (for services
|Payment due with return.|
Businesses and individuals incurring use tax liabilities who are not registered vendors may file a Business Use Tax Return (Form ST-10) or Individual Use Tax Return (MassTaxConnect). Both returns are due annually by April 15. Alternatively, individuals may report and pay any Massachusetts use tax due on their personal income tax return, Massachusetts Resident Tax Return (Form 1) or Form 1-NR/PY for part-year residents.
Individuals have the option of using a schedule to self-report an estimated, or "safe harbor," amount of use tax based on their Massachusetts adjusted gross income. Purchases of items having a sales price of $1,000 or more are excluded from the "safe harbor." For more information, please see TIR 04-26, Sales/Use Tax Changes Contained in Chapter 262 of the Acts of 2004.
What are the electronic filing and payment requirements?
Businesses with a combined annual withholding, sales/use tax (including sales tax on meals and telecommunications services) and room occupancy excise liabilities of $5,000 or more are required to file returns and make payments electronically. Once the tax liability reaches the electronic filing threshold in one year, the business must file and pay electronically in all subsequent years, regardless of the amount due, as long as it has an obligation to file one of these three categories of taxes in Massachusetts. Also, all returns with zero tax due are required to be filed electronically, regardless of the amount of the business' total tax liability. All new businesses and existing businesses applying for an additional registration must file and make payments electronically, regardless of the amount of their annual tax liability. Individual taxpayers filing Form ST-11 must file, make payments, and submit any amendment or abatement requests electronically. For more information on electronic filing, see Technical Information Releases 04-30, 10-18and 15-9 and 16-9.
How do I submit returns and payments electronically?
Trustee and business tax taxpayers may file returns and make payments electronically through DOR's secure Web-based application, MassTaxConnect.
Vendors must register with DOR in order to use MassTaxConnect.
For more information on electronic filing, see TIR 16-9, Expansion and Restatement of Electronic Filing and Payment Requirements; TIR 15-9, Electronic Filing and Payment Requirements Extended to Additional Tax Types; TIR 10-18, Electronic Filing Thresholds Modified; and TIR 04-30, Revised Electronic Filing Requirements.
How can I assure timely filing?
An electronically filed return or report is deemed timely filed if electronically submitted on or before the due date, before midnight Eastern time, with all required information accurately entered. Upon submission, the filing entity will receive a confirmation number and time-and-date stamp, which constitute the substantiating date mark providing proof of time and filing date.
In order to be considered timely filed, a paper return must be received by DOR on or before the due date, or if delivered after the due date, it must be postmarked by the U.S. Postal Service or date-stamped by a private delivery service at least two days prior to the due date.
What are the penalty and interest charges for late returns and payments?
Sales/use tax returns that are not filed on or before the due date are subject to interest and penalty charges. The penalty for late payment is one percent of the unpaid tax shown on the return per month (or fraction thereof), up to a maximum of 25 percent.
The penalty for failure to file a return by the due date is one percent of the balance due per month (or fraction thereof), up to a maximum of 25 percent.
Also, if you fail to pay the tax when due, interest will be charged at the federal short-term rate (which can change quarterly) plus four percentage points, compounded daily. If you wish to obtain information on these rates, please call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
Are there other penalties?
Yes. A vendor who underpays the sales/use tax due to negligence or disregard of the tax laws, or who substantially understates a tax liability on a return, may be subject to a penalty of 20 percent of the underpayment if the underpayment exceeds the greater of 10 percent of the tax required to be shown on the return or $1,000. See TIR 06-5, New Penalties under G.L. c. 62C, §§ 35A-35E, for more information.
Willful evasion of taxes is a felony punishable by a fine up to $100,000 for individuals or $500,000 for corporations and/or imprisonment for up to five years. Willful failure to collect and pay over taxes is also a felony and is punishable by a fine up to $10,000 and/or imprisonment for up to five years.
Taxpayers who do not comply with the requirements to file returns, make payments or submit data to DOR in an electronic format will be subject to a penalty of up to $100 for each return, payment or data transfer submitted incorrectly to DOR. Please refer to TIR 04-12, Penalty for Failure to File, Report or Pay in the Prescribed Format; TIR 04-30, Revised Electronic Filing Requirements; and TIR 10-18, Electronic Filing Thresholds Modified, for more information.
Must a return be filed even if no tax was due for a given period?
Yes. A return must be filed for all periods even when no tax is due - just enter zero in the appropriate places. Filing each period is necessary for DOR's record keeping purposes. It also will help to avoid requests from the Department for filing information. Please note that all returns with zero tax due must be filed electronically. For more information, please see TIR 04-30, Revised Electronic Filing Requirements.
How can sales/use tax reporting errors be corrected?
MassTaxConnect participants can use the "amend" feature of their MassTaxConnect account to make changes to previously filed withholding, sales and use tax (including sales tax on meals) and room occupancy tax returns. 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.
Keep in mind that some taxpayers are required to file amended returns and applications for abatement electronically. Refer to TIR 16-9, Expansion and Restatement of Electronic Filing and Payment Requirements, to see if the electronic filing and payment requirements apply to you.
If you are not required to file electronically, you can check the amended return box on your paper return and file it the way you usually do to amend a previously filed return, or file Form ABT, Application for Abatement to dispute an audit finding, dispute a penalty, or dispute a responsible person determination. (Note that Form ABT must be used to dispute a Responsible Person determination.)
What records must sales/use tax vendors keep?
Vendors registered to collect sales/use tax must keep complete and accurate records of the gross receipts from all sales, whether taxable or not. Vendors also must retain copies of sales/use tax returns together with any supporting information necessary to verify the accuracy of the return.
Sufficient records provide the vendor with evidence of each transaction and may include, but are not limited to, register tapes, cash journals, memorandum accounts and ledgers. Vendors must retain copies of exempt certificates and credit memos issued to purchasers.
Vendors also must keep records of expenditures from purchases whether taxable or not. Sufficient records may include evidence of original transactions, purchase journals and ledgers.
Vendors using electronic data processing systems are required to retain certain electronic records. For further information, please refer to DOR Regulation 830 CMR 62C.25.1(3), (4) and (5).
How long should sales/use tax records be kept?
Records must be retained for a minimum of three years from the date the return was filed or the date it was required to be filed, whichever is later.
Additionally, returns may be audited for up to six years for understating by more than 25 percent the tax due on receipts that should have been reported on the return. You also should know that there is no limitation on the period for which DOR may request records if a vendor failed to file a return or filed a false or fraudulent return. Further information about retaining records is available in DOR Regulation 830 CMR 62C.25.1, Records Retention.
How are bad debts treated?
Vendors must pay tax on all sales regardless of whether payment is received at the time of sale. Reimbursement for tax remitted on bad debts can be claimed only on an annual basis on a Claim for Bad Debt Reimbursement (Form ST-BDR). This form must be filed by the due date, including extensions, of the vendor's federal income tax return for accounts determined to be worthless during the prior fiscal year. For more information and requirements, please see TIR 07-3, Sales Tax Bad Debt Credit Statute, and TIR 00-3, Claiming the Bad Debt Reimbursement.
The purpose of this publication is to provide taxpayers with general information about Massachusetts tax laws and Department of Revenue policies and procedures as of January 27, 2017. It is not designed to address all questions in detail, and taxpayers are encouraged to seek further guidance as described throughout this guide. Nothing contained within this publication supersedes, alters or otherwise changes any provisions of Massachusetts General Laws, Massachusetts Department of Revenue Regulations or Rulings or any other sources of the law.