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This guide has general information about Massachusetts sales and use tax. It describes the tax, what types of transactions are taxable, and what both buyers and sellers must do to comply with the law. This also includes a general listing of items that are exempt from the Massachusetts sales and use tax.
The Massachusetts sales tax is 6.25% of the sales price or rental charge of tangible personal property (including gas, electricity, and steam) or certain telecommunications services sold or rented in Massachusetts. The buyer pays the sales tax, as an addition to the purchase price, to the vendor at the time of purchase. The vendor then sends the tax to Massachusetts.
For motor vehicle and trailer sales, however, the buyer pays the sales tax directly to Massachusetts. For more detailed information on motor vehicle sales taxes, see here or call us.
The Massachusetts use tax is 6.25% of the sales price or rental charge on tangible personal property (including phone and mail order items or items purchased over the Internet, and electronically transferred software) or certain telecommunications services:
For example, if you buy furniture for your Massachusetts business or home from an out-of-state firm, you don't pay sales tax, but you still have to pay the 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 Massachusetts. Unlike for the sales tax, the buyer generally pays the use tax directly to Massachusetts.
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 transmitting messages or information by various electronic means, but not on the sale or use of information itself.
A vendor is anyone who:
Tax-exempt organizations that sell tangible personal property or telecommunications services in the regular course of business are also considered vendors and required to collect sales/use tax.
Vendors are responsible for:
Out-of-state vendors who meet any of the vendor definitions listed above generally have the same responsibilities as Massachusetts vendors.
After you register with us, we'll give you a Sales and Use Tax Registration Certificate (Form ST-1) for each business location. The form must be displayed on the business premises where customers can easily see it.
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.
If you're a cigarette retailer, you must register for sales tax since cigarette sales are subject to the sales tax. You must also have a Massachusetts cigarette retailer's license. You can apply for a cigarette retailer's license online. You should also check with your local Board of Health to see if you also need a local tobacco sales permit.
If you're a tobacco product (cigarettes, cigars, smoking tobacco, and smokeless tobacco) retailer, you must prepay sales tax on such products to your suppliers. You must continue to collect and send sales tax on your tobacco product sales, and may take credit on your sales tax return (for as much prepaid sales tax you paid your suppliers). Wholesalers of tobacco products must collect and send sales tax to retailers and report these sales as taxable sales on their sales tax return.
Vendors registered to collect sales/use tax must keep:
Sufficient records provide the vendor with evidence of each transaction and may include, but are not limited to:
If you use electronic data processing systems, you must also keep certain electronic records (see 3, 4, and 5).
Records must be kept for at least 3 years from the date the return was filed or the date it was required to be filed, whichever is later. Returns may also be audited for up to 6 years for understating by more than 25% the tax that should have been reported on the return. If you failed to file a return or filed a false or fraudulent return, we may request records at any time.
As a vendor, you must pay tax on all sales even if you didn't receive payment at the time of sale. You can only claim reimbursement for tax remitted on bad debts on an annual basis by filing a Claim for Bad Debt Reimbursement (Form ST-BDR). It must be filed by the due date, including extensions, of your federal income tax return for accounts determined to be worthless during the prior fiscal year.
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. Instead, they must pay their use taxes by filing either a Business Use Tax Return (Form ST-10) or an Individual Use Tax Return (Form ST-11).
Generally, anyone who pays sales/use tax to another state on merchandise or telecommunications services to be used in Massachusetts is entitled to a credit against the Massachusetts use tax (up to the Massachusetts sales/use tax rate, 6.25%). This credit is only granted for sales tax paid to another state if that state has a reciprocal sales/use tax 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% is paid to the other state, the Massachusetts use tax is the difference between the 2 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, but not all. If you need more detailed information about a specific state, see Exemption from Massachusetts Use Tax for Taxes Paid Under Laws of Another State, or call us.
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 (Form ST-11). Both returns are due annually by April 15.
Individuals may report and pay any Massachusetts use tax due on their personal income tax return (Form 1, Form 1-NR/PY for part-year residents). Taxpayers can self-report ("safe harbor") an estimated amount of use tax based on their Massachusetts adjusted gross income. "Safe harbor" excludes purchases of items that have a sale price of $1,000 or more.
You must file returns and make payments electronically if you are a business with:
that total $5,000 or more when combined together. Once your tax liability reaches the electronic filing threshold in 1 year, you must file and pay electronically for all following years, regardless of the amount due, as long as you are obliged to file 1 of the above 3 tax categories (annual withholding, sales/use tax, room occupancy) in Massachusetts.
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 also file, make payments, and submit any amendment or abatement requests electronically.
You must file a return for all periods, even when no tax is due - just enter 0 in the appropriate places. All returns with 0 tax due must be filed electronically, regardless of the amount of the business' total tax liability.
Trustee and business tax taxpayers may file returns and make payments electronically through MassTaxConnect. You must first register with us to use it.
An electronically filed return or report is considered timely filed if it's electronically submitted (with all accurate required information) on or before the due date, before 12 a.m. EST. After submitting it, you'll receive a confirmation number and time-and-date stamp, which proves time and filing date.
For a paper return to be considered timely filed, we must receive it 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 2 days before the due date.
For motor vehicle and trailer sales, the buyer directly pays the Commonwealth. The dealer collects the sales tax on boats and recreational vehicles at the time of sale. For casual sales, the sales/use tax is due before registering 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 online. To register a boat or recreational vehicle, you need to keep the confirmation page you get after filing and paying the tax.
If you've bought a motor vehicle or trailer that must be registered or titled in Massachusetts, you must file an Application for Title and Registration (Form RMV-1), and pay the sales/use tax within 10 days of buying, transferring, or first using the motor vehicle or trailer.
If the motor vehicle or trailer doesn't have to be registered in Massachusetts (including motor vehicles and trailers that are bought in Massachusetts by nonresidents who will register or title the motor vehicle or trailer outside of Massachusetts), you must still file a Motor Vehicle Certificate of Payment of Sales or Use Tax (Form ST-7R) and pay the full sales tax to us or the Registry of Motor Vehicles on or before the twentieth day of the month following the month you bought, transferred or first used the motor vehicle or trailer.
See more detailed information on motor vehicle sales taxes here.
MassTaxConnect users can use the “amend” feature in MassTaxConnect to change 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.
Some taxpayers are required to file amended returns and applications for abatement electronically. See if electronic filing and payment requirements apply to you.
If you're 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 an Application for Abatement (Form ABT) to dispute:
There are interest and penalty charges for not filing sales/use tax returns on or before the due date.
If you fail to pay the tax when due, you'll also be charged interest at the federal short-term rate (which can change quarterly) plus 4%, compounded daily. Call us for more information on these rates.
If you underpay the sales/use tax due to neglecting or disregarding tax laws, or substantially understate a tax liability on a return, you may be subject to a penalty of 20% of the underpayment if the underpayment exceeds 10% of the tax required to be shown on the return or $1,000, whichever is greater.
Willful tax evasion is a felony punishable by a fine up to $100,000 for individuals or $500,000 for corporations and/or imprisonment for up to 5 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 5 years.
Taxpayers who do not comply with the requirements to file returns, make payments or electronically submit data to us will be penalized up to $100 for each return, payment or data transfer they submitted incorrectly. See Penalty for Failure to File, Report or Pay in the Prescribed Format, Revised Electronic Filing Requirements, and Electronic Filing Thresholds Modified for more information.
The following categories of sales or types of transactions are generally exempted from the sales/use tax:
Sales of food for human consumption (other than meals sold by a restaurant) and clothing costing $175 or less. For items that cost more than $175, sales tax is only due on the amount over $175 per item.
Sales of periodicals such as newspapers and magazines. Newsletters, however, are generally not treated as newspapers and may be taxable.
Sales of tickets to activities such as sporting and amusement events.
Sales of utilities (gas, steam, electricity) and heating fuel to:
Sales of local residential telephone services billed on a recurring basis or for message unit charges (when provided to a residential purchaser), up to a total of $30 per month. This includes service provided to an individual for personal use at their residential address (including an individual dwelling unit such as an apartment).
For institutions where individuals reside (e.g., schools, nursing homes), telephone service is considered residential if it's 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 used.
These services are generally exempt. For example, a separately stated transportation charge for shipping by a common carrier is exempt if the transportation occurs after the property is sold. See more information about shipping and handling charges here.
Services such as:
Items sold along with services (e.g., a bottle of shampoo from a salon, parts for a car repair), are taxable and must be itemized separately on the bill. Tax law treats some products as services and therefore exempts them, while others may have taxable and non-taxable elements. Although other products may be labeled custom or a service, they may not meet the legal definition for tax purposes.
If you're a service provider with questions about the taxability of your transactions, refer to Services Enterprises or contact our Rulings and Regulations Bureau.
Infrequent and nonrecurring transactions made by people or businesses that don't regularly make such sales. For example, sales of used appliances by a homeowner or sales at infrequent yard sales. Please note that generally, casual sales of cars, boats or trailers are taxable except for certain family transactions. See more detailed information on casual and isolated sales here.
Sales where the purchaser intends to resell the item or telecommunications services as part of business. The seller must be given a Sales Tax Resale Certificate (Form ST-4) and retain it 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 MassTaxConnect.
Sales Tax Resale Certificates are invalid for the sale or purchase of tobacco products.
Sales where the purchaser accepts title to and possession of an item outside of Massachusetts. Similarly, if a vendor must deliver to an out-of-state purchaser's address or an interstate common carrier, the sale is not taxable in Massachusetts. However, any taxable item brought into the state within 6 months of purchase for use, storage or consumption in Massachusetts is generally subject to the use tax.
A business with nexus in Massachusetts is required 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. See a more detailed explanation of the rules regarding drop shipment transactions here.
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 such organizations. To claim the exemption, the buyer or their agent must provide the vendor with:
Sales made directly to federal and Massachusetts state or municipal government agencies or entities. To qualify, the agency must be a regular government department, or an entity wholly owned by the government, which exclusively performs governmental duties.
Additionally, sales of tangible personal property, including meals, to agents of governmental entities, are exempt, provided certain requirements are met. See Sales and Use Tax Exemptions: Agents of Exempt Entities and Sales Tax on Meals for more information.
Sales of tangible personal property for use in fulfilling government public works projects to certain contractors and subcontractors acting as agents for governmental entities.
To claim the exemption, the contractor or subcontractor must provide the vendor with a signed copy of 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 Form ST-5C that they're claiming the exemption for property used to fulfill a contract to provide qualified services in a public project.
Selling materials, tools, fuel, machinery and replacement parts to contractors for 1 of the exempt uses described in G.L. c. 64H, § 6(r) and § 6(s) (e.g., manufacturing, research and development, agricultural production) are also exempt, regardless of whether the contractor is purchasing as an agent of the party that will use these items in the manner exempted by these provisions. Contractors can buy qualifying property 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 way. If the items don't qualify for an exemption, a contractor will be liable for the tax.
That will be used directly and exclusively in the actual manufacture, processing or conversion of the tangible personal property to be sold, including publishing a newspaper or operating a commercial radio broadcasting or television transmission.
Sales of the above items that are consumed and directly used in research and development by a manufacturing corporation or a research and development corporation generally are also exempt. See more information about the qualifications of a research and development corporation here, or call our Rulings and Regulations Bureau.
The vendor must get an Exempt Use Certificate (Form ST-12) from the purchaser and maintain proper records of these sales.
Since tax law is complex, the guidelines listed below may not apply to every transaction. To avoid any interest or penalty charges on tax that was not collected properly, if you have any questions, call us, or request a letter ruling by writing to:
Department of Revenue
Rulings and Regulations Bureau
P.O. Box 9566, Boston, MA 02114-9566
Clothing is generally exempt from the sales tax. However, any individual clothing item that costs more than $175 is taxable on the amount it goes over $175. Thus, the tax on a $200 suit would be $1.56 (which is 6.25% of the taxable $25 difference). If buying multiple items, any sales tax is charged only on individual items over $175, no matter what the total bill is.
While apparel designed solely for athletic or protective use is taxable, items that are also suitable for everyday use are exempt.
Food products for human consumption and food items purchased with federal food stamps are generally exempt from the sales tax.
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:
See more detailed information about sales tax on meals here or check out our Guide to Sales Tax on Meals.
Food or beverages prepared for human consumption and provided by a restaurant or restaurant part of a store are taxable as "meals", including those sold on a "take out" or "to go" basis.
The law generally determines whether health care items and equipment are taxable or not.
Rentals, sales, and repairs of the following are only exempt when prescribed by a registered physician:
Household items generally are taxable, but seeds used to grow food for human consumption are exempt.
Owners or tenants of residential property located in Massachusetts can get a credit against their personal income tax for expenses related to renewable energy source property. To get the credit, complete and file Massachusetts Schedule EC, Solar and Wind Energy Credit, with your annual income tax return.
Reading materials and stationery are generally taxed. Exemptions are allowed for newspapers, magazines, books used for religious worship, and educational textbooks.