This guide provides some general information on tax issues specific to electricians and resources for registering, filing returns and making payments. It is not intended to be used as a legal ruling, but merely as a general guide for sales and use taxes as they relate to electricians. Not every tax situation is covered in this guide. If you have questions about the taxes on the goods or services you provide, see the “Contact Us” section of this guide.
Generally, electricians act as contractors when they perform:
- Remodeling or
- Repair of real property
and are the consumers of tangible personal property (material) purchased by them for the performance of their contracts. In these instances, they are required to pay sales or use tax as consumers on the total price of the material purchased at the time of purchase, unless the purchase is exempt from tax.
There are several exemptions from tax that may apply depending on whether the material is:
- Purchased for an entity that is exempt from tax or
- Used in an exempt manner.
If an electrician doesn’t pay sales tax at the time of sale and the material is subject to tax, the electrician must:
- Self-assess a use tax on the cost of the material and
- Remit the tax to the Department of Revenue (DOR).
Where an electrician agrees to sell material and provide installation services for a separate price, the electrician is:
- Acting as a vendor and
- Required to collect the sales tax based on the price the electrician charges their customer.
There are exceptions when electricians:
- Perform contracts for organizations that are exempt from sales tax under G.L. c. 64H, Section 6(d) and/or Section 6(e).
- Purchase material(s) that are used in an exempt manner from sales tax under G.L. c. 64H, Section 6(r) and Section 6(s).
Examples of Electrical Contracts
- An electrician is awarded a contract to wire and install all electrical receptacles and switches for the customer. The electrician is considered the consumer of all the material goods and sales or use tax is due on the total sales price paid to the vendor(s) for material.
- A customer hires an electrician under a lump-sum contract to replace all of the wiring and overhead light fixtures in a building. The electrician is considered the consumer of all material purchased to perform the services for which he or she was hired. Sales or use tax is due on the total price paid to the vendor(s).
Examples of Taxable Purchases Made by Electricians When Performing Contracts
Electricians pay sales tax on material purchased to be used in fulfilling their contracts. Some examples of the purchases are:
- Lighting fixtures and accessories
- Electrical panels
- Wall plates
- Outlet boxes
- Wire connectors
- Plugs and connectors
The above list is not meant to be complete.
Electricians acting as contractors don’t provide resale certificates for the purchase of material to be incorporated into taxable projects. However, exemption certificates may be issued for material purchased on behalf of exempt entities or used in an exempt manner.
For more information, see the Certificates Needed to Claim Exemption section of this guide.
Purchases and Rentals of Tools of the Trade Made by Electricians
Electricians are the consumers of the tools of the trade purchased and/or rented by them. They are responsible for paying sales tax on the total purchase/rental price at the time of sale.
Some examples of these purchases are:
- Outlet testers
- Voltage testers/detectors
- Replacement parts for tools
- Drill bits
- Saw blades
- Crimping tools
- Wire strippers/cutters
- Utility knives
- Cutting pliers
- Tape measures
- Work lights.
The above list is not meant to be complete.
If an electrician is purchasing or renting tools that relate to a contract for a customer that is exempt from tax, these purchases or rentals may also be exempt from tax.
Customers that are tax exempt include:
- Government organizations
- Public schools
- 501(c)(3) organizations or
- Other exempt entities such as:
- Private schools or
- Scout Troops.
For more information, see the Exemptions section of this guide.
Electricians as Vendors
There are situations where, instead of acting as a contractor, an electrician can act as a vendor.
An electrician is considered to be acting as a vendor if the electrician
Sells material and also
Provides the service of simply installing a complete unit of standard equipment, applying or connecting the material he or she is selling without substantial fabrication.
When electricians purchase material that will be resold to their customers, electricians should present a resale certificate, Form ST-4, to their vendors at the time the material is purchased.
For more information, see the Certificates Needed to Claim Exemption section of this guide.
An electrician who furnishes and installs material where the customer’s real object of the transaction is to acquire the material is considered to be a vendor of that material. The electrician must collect sales tax on the sales price of the material sold to the customer.
See Massachusetts Regulation 830 CMR 64H.1.1, Service Enterprises.
Additional Resources for Electricians as Vendors
Examples of Tangible Personal Property Utilized in Vendor Sales
- An electrician is hired to replace a broken ceiling fan by a customer. The electrician separately states the price of the new ceiling fan and the labor charge. The sales tax is due on the price of the ceiling fan as sold to the customer. The charge for the labor isn’t subject to tax.
In this example, the electrician may give a resale certificate to its own vendor when it purchases the ceiling fan. If the electrician does not separately state the charge for the fan, the entire combined charge is taxable to the customer if the value of the material (the fan) is more than 10% (consequential) in relation to the total charge.
- A customer hires an electrician to replace smoke detectors throughout its premises. The electrician provides an invoice to the customer that separately states the price of the new smoke detectors, as well as the labor to install them.
The sales tax is due on the sales price of the smoke detectors. If the electrician does not separately state the price of the smoke detectors, the entire combined charge is taxable to the customer if the value of the smoke detectors is more than 10% in relation to the total charge.
Electricians Performing Contracts for Customers Exempt from Sales Tax Under G.L. 64H, Section 6(d) and/or Section 6(e).
There may be times when an electrician is hired to perform electrical services for customers that are exempt from paying sales tax under G.L. c. 64H, Section 6(d) and/or Section 6(e).
Customers that are exempt may include:
- The U.S. Government
- The Commonwealth of Massachusetts
- A Massachusetts state agency
- or their agents or
- 501(c)(3) organizations.
Electricians Purchasing Material for Certain Uses Qualifying for Sales Tax Exemptions Under G.L. 64H, Section 6(r) and/or Section 6(s).
There may be times when an electrician is hired to perform electrical services for customers and the material(s) they purchase are used in a manner that exempts the material from sales tax. Examples of exempt customers include:
- Qualified manufacturers or
- Research and development corporations.
Examples of use-based exemptions
1. Under G.L. c. 64H, Section 6(r), sales of
- Fuels or
- Any substitute therefor
are exempt from sales tax if the material, tools or fuels:
- Become an ingredient or component part of tangible personal property to be sold; or
- Are consumed and used directly and exclusively in:
- Agricultural production
- Commercial fishing
- An industrial plant in the actual manufacture of tangible personal property to be sold, including the publishing of a newspaper
- The operation of commercial radio broadcasting or television transmission
- The furnishing of power to an industrial manufacturing plant
- The furnishing of gas, water, steam or electricity when delivered to consumers through mains, lines or pipes
- The production of animals for research, testing, or other purposes relating to the promotion or maintenance of the health, safety or wellbeing of human beings or animals or
- Research and development by a manufacturing corporation.
2. Section 6(s) likewise exempts sales of machinery or replacement parts thereof used in substantially the same manner as the material, tools and fuels covered by Section 6(r). With a few exceptions not important here, material exempt from sales tax are also exempt from use tax. G.L. c. 64I, Section 7(b).
Electricians (and other entities, or other contractors or subcontractors) may purchase material covered by the sales tax exemptions in G.L. c. 64H, Section 6(r) and Section 6(s) tax free provided that the purchased material will be used in the manner specified by the statute (as listed above). Electricians purchasing qualifying material may do so by presenting an exempt use certificate, Form ST-12, to the vendor.
Electricians purchasing such material must prove during an audit that the material(s) purchased were used in the manner stated on the exempt certificate.
If the materials do not qualify for exemption, the electrician will be liable for the tax. See DOR Directive 07-6.
Additional Resources for Exemptions
Examples of Exempt Purchases Made by Electricians When Performing Services for Entities Qualifying for Sales Tax Exemptions Under G.L. 64H, Section 6 (r) and/or Section 6 (s)
- An electrician is hired to wire various manufacturing machinery located at a company’s manufacturing plant. The company provides the electrician with a validly executed, properly completed exempt use certificate (Form ST-12) for the electrician to purchase materials that are needed to perform the services. The electrician may present the Form ST-12 to the vendor(s) in order to avoid being charged sales tax.
- The same company hires the electrician to replace wiring and lighting fixtures in its accounting office adjacent to its manufacturing area. Once again, the company provides the electrician with a validly executed, properly completed exempt use certificate (Form ST-12) for the electrician to purchase materials that are needed to perform the services.
In this instance, if the electrician presented the Form ST-12 to the vendor(s) in order to avoid being charged sales tax, the electrician would have to prove on audit that the materials purchased were used in an exempt manner. If it was determined that the material didn’t qualify for the exemption (because the accounting office isn't part of the exempt manufacturing area, for example), the electrician would be liable for the tax
- A research and development corporation awards a contract to an electrician to perform electrical work that will connect all of its laboratory equipment to its electrical service. The corporation provides the electrician with a validly executed, properly completed exempt use certificate (Form ST-12) for the electrician to purchase the material required to complete the work. The electrician may present the Form ST-12 to the vendor(s) in order to avoid being charged sales tax.
Certificates Needed to Claim Exemption
- Certificate of Exemption (Form ST-2). Exempt organizations register with the Department of Revenue and are issued a Form ST-2. When presented with an Exemption Certificate (Form ST-5) for purchasing material for use in the conduct of their business, the Form ST-2 must be in effect and not expired at the time of purchase.
- Sales Tax Resale Certificate (Form ST-4). When an electrician acts as a vendor and purchases material for resale, the electrician must provide a completed copy of a Form ST-4, Sales Tax Resale Certificate, to the vendor instead of paying sales tax. Sales tax will be due when the vendor sells the tangible personal property to the ultimate consumer of the goods.
- Sales Tax Exempt Purchaser Certificate (Form ST-5). When an exempt organization purchases material for use in the conduct of its business, it will provide a completed copy of a ST-5, Sales Tax Exempt Purchaser Certificate. Government organizations (public schools, city/town government, state agency, etc.) should attach a copy of their Form ST-2, if available (see #1). If unavailable, enter the exemption number, if known. Exempt organizations (501(c)(3) organizations such as private schools, Scout troops etc.), must attach a copy of their Form ST-2.
- Contractor’s Sales Tax Exempt Purchase Certificate (Form ST 5C). Where an electrician is acting as a contractor or subcontractor performing construction services on behalf of a customer claiming a sales tax exemption under G.L c. 64H section 6(d), 6(e), the electrician must provide a completed Form ST 5C to the vendor when purchasing material used pursuant to the contract.
- Exempt Use Certificate (Form ST-12). An electrician may provide Form ST-12 to the vendor when purchasing material which are to be used in an exempt manner as provided by G.L. c. 64H, Section 6(r) and Section 6(s).
For additional information about the rules for exemption certificates, see Massachusetts Regulation 830 CMR 64H.8.1, Resale and Exempt Use Certificates. For more details, see the More Info section).
Additional Resources for Certificates Needed to Claim Exemption
Other Tax Obligations
The above information provides some general sales and use tax information for this specific industry, but this guide isn't intended to provide a complete discussion of the sales/use tax requirements for this industry. A business operating in Massachusetts may have other tax obligations, such as income tax, corporate excise and/or withholding tax. For more information concerning Massachusetts state business taxes including sales/use tax, visit Business Taxes or contact DOR at (617) 887-6367 or (800) 392-6089 from 8:30 a.m. to 4:30 p.m. business days. To register your business and file and pay your business taxes, visit MassTaxConnect.
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- GL c. 64H § 1: Definitions: Sales Price
- GL c. 64H § 2: Excise imposed on sales at retail by vendor of tangible personal property
- GL c. 64H § 6(d), 6(e), 6(r) & 6 (s)
- 830 CMR 64H.1.1 Service Enterprises
- 830 CMR 64H.8.1 Resale and Exempt Certificates
- 830 CMR 62C.25.1 Records Retention
- DOR Technical Information Release 02-12; 98-10
- DOR Directive 07-6
- DOR Letter Rulings 06-3; 94-6; 94-5; 88-8; 88-5; 85-68; 85-25; 82-122; 82-121; 82-45
- See Ace Heating, 371 Mass. 256-57
Additional Resources for More info
Department of Revenue
- If you have general questions about filing your taxes or taxability of good or services you provide, contact customer service at (617) 887-6367 or (800) 392-6089 (toll-free in Massachusetts).
- If you have questions about public written statements and ruling requests, recent legislation, or other legal issues, contact the Rulings and Regulations Bureau at RulesandRegs@dor.state.ma.us