Overview
Business use tax is a 6.25% tax paid on out-of-state or out-of-country purchases that are used, stored or consumed in Massachusetts and on which no Massachusetts sales tax (or less than 6.25%) was paid.
Unlike the 6.25% sales tax, which is collected by sellers, use tax is generally paid directly to the state by the purchaser.
Keep in mind:
If your business is registered to collect sales tax, use tax is reported on and paid with your sales tax return. Effective for returns for tax periods beginning on or after January 1, 2022, and any late-filed returns for earlier periods, all vendors remitting sales and use taxes under chapters 64H and 64I, are required to file all returns and submit all payments electronically, regardless of tax liability or the date they registered to collect sales tax. See TIR 21-9. Returns must be filed online through MassTaxConnect.
If your business is not required to collect sales tax, a use tax is due by April 15th of the following year after your purchase.
- Generally, if you paid a sales tax of 6.25% or more to another state, you would not have to pay a use tax to Massachusetts.
- If you paid less than a 6.25% sales tax to another state, the use tax (remaining balance) would be due to Massachusetts.
- No credit is allowed for a sales tax or value-added tax (VAT) paid to another country, or for a local tax paid to any city, town or county except where a jurisdiction has a credit similar to that provided in G.L. c. 64I, § 7(c) for corresponding state and local taxes. See TIR 03-1.
Some examples of purchases which can be subject to business use tax are:
- Office supplies
- Software
- Furniture
- Fixtures
- Equipment
Motor Vehicles, Trailers, Boats, Recreational Off Highway Vehicles, & Snowmobiles
Unlike with the purchase of most items, (on which use tax is either due by April 15th of the following year or due with a sales and use tax return) use tax for these items is due by the 20th day of the following month after your purchase.
- Motor vehicles
- Trailers
- Boats
- Recreational off-highway vehicles
- Snowmobiles
If you purchase these items outside of Massachusetts and bring them into Massachusetts within 6 months for permanent use in Massachusetts, a use tax is due by the 20th day of the following month when it entered Massachusetts.
For example, if you purchased a motor vehicle in New Hampshire on January 1st and brought it into Massachusetts on June 30, a use tax would be due by July 20th.
After 6 months, the Department of Revenue may assert that a purchase is subject to use tax if it was intended for use, storage or consumption in Massachusetts.
Keep in mind:
Generally, if you paid a sales tax of 6.25% or more to another state, you would not have to pay a use tax to Massachusetts. If you need information about a specific state, please call us.
If you paid less than a 6.25% sales tax to another state you would owe the difference to Massachusetts if your vehicle was brought into Massachusetts for permanent use within 6 months.
If use tax is due on a motor vehicle or trailer purchased out-of-state or through a non-dealer sale, the tax must be paid to the Registry of Motor Vehicles.
If you are not registering your vehicle, the use tax must be paid with Form ST-7R.
Use tax on boats, snowmobiles or off-highway recreational vehicles must be reported and paid online with the ST-6 through MassTaxConnect or the paper Form ST-6.
Reporting & Paying Business Use Tax
If your business is registered to collect sales tax, use tax is reported on and paid with your sales tax return. Effective for returns for tax periods beginning on or after January 1, 2022, all returns must be filed online through MassTaxConnect. See TIR 21-9.
If you are not registered to collect sales tax:
- You must report and pay use tax with Form ST-10: Business Use Tax Return online via MassTaxConnect.
- Form ST-10 is due on or before April 15 for purchases made in the prior calendar year.
Schedule C filers may not report use tax on business purchases together with their individual use tax on Form 1, Form 1-NR/PY or Form ST-11, Individual Use Tax Return.
When Business Use Tax Is Not Due
Business use tax is not due when:
- Goods are purchased for resale within the normal course of business
- Goods are purchased for use as an ingredient or component part of an article of tangible personal property produced for sale
- Machinery and equipment are purchased for use in manufacturing operations
- Sales or use tax has been paid to another state or U.S. territory on tangible personal property to be used in Massachusetts
- Generally, if you paid a sales tax of 6.25% or more to another state, you would not have to pay a use tax to Massachusetts.
No credit is allowed for a sales tax or value-added tax (VAT) paid to another country, or for a local tax paid to any city, town or county except where a jurisdiction has a credit similar to that provided in G.L. c. 64I, § 7(c) for corresponding state and local taxes. See TIR 03-1.
Additional Resources
More Use Tax Information
Massachusetts presumes that any tangible personal property purchased outside of Massachusetts and brought into the state within 6 months is for use, storage or consumption and is subject to the use tax. This presumption may be challenged by the purchaser. When property is brought into Massachusetts 6 months after purchase, the Department of Revenue may assert that a purchase is subject to use tax if it was intended for use, storage or consumption in Massachusetts.
Additional Resources
Contact for Massachusetts Business Use Tax
Phone
9 a.m.–4 p.m., Monday through Friday