Changes starting October 1, 2019
Starting October 1, 2019, there will be new Massachusetts sales and use tax collection requirements that apply to out-of-state “remote” sellers and marketplace facilitators (“marketplaces”). Remote sellers must collect tax on sales of tangible personal property or services into Massachusetts when they have Massachusetts sales that exceed $100,000 in a calendar year. Marketplaces must collect tax on behalf of third parties (“marketplace sellers”) selling on the marketplace when the marketplace’s total Massachusetts sales (including those facilitated on behalf of marketplace sellers and those made directly by the marketplace on its own behalf) exceed $100,000 in a calendar year.
Note that remote sellers and marketplaces may have to collect tax during the last quarter of 2019, as well as for calendar years beginning on or after January 1, 2020. To be notified of future DOR developments, you may receive updates from DOR.
Visit Remote Seller and Marketplace Facilitator FAQs for more information.
Registration, collection, and remittance
I am a remote Internet vendor selling tangible personal property and/or services to customers in Massachusetts. I don’t have any offices, employees, representatives, or inventory in Massachusetts. Do I need to register to collect and remit Massachusetts sales or use tax?
You must register for and collect and remit sales or use tax if you had over $500,000 in Massachusetts sales AND 100 or more transactions resulting in deliveries within Massachusetts during the preceding calendar year. The collection requirement applies only if you meet both of these tests.
How do I register?
You may register with us here.
What sales are included when determining the $500,000 Massachusetts sales threshold stated in the Regulation?
All sales over the Internet resulting in deliveries within Massachusetts during the preceding calendar year are included, regardless of whether these sales are subject to sales or use tax.
What transactions are included when applying the Regulation’s transactional threshold?
All of the vendor's transactions for tangible personal property or a service, however consummated, including transactions completed on a website operated by the vendor, a related person, or a contract party, including an online marketplace. A transaction may include the sale of multiple goods or services in a single purchase.
I am a remote Internet vendor who met the threshold requirements stated in the Regulation before 2018. When was I required to register?
If you had more than $500,000 in Massachusetts sales and 100 or more in-state transactions during the 12-month period, October 1, 2016 to September 30, 2017, you were required to register, collect and remit the tax for the period beginning October 1, 2017. If you had more than $500,000 in Massachusetts sales and 100 or more in-state transactions during the 2017 calendar year, you were required to register, collect and remit the tax beginning January 1, 2018. The Regulation was prospective as of October 1, 2017 and does not apply before that date.
I am an Internet vendor who had more than the $500,000 in Massachusetts sales and 100 or more in-state transactions for the first time during the 2018 calendar year. When am I required to register?
In this situation, you are required to register, collect and pay over sales or use tax beginning January 1 of the following year, i.e., calendar year 2019.
What if I have inventory stored in a Massachusetts warehouse that is owned by a company operating an online marketplace?
If you store inventory in a Massachusetts warehouse, whether it is your own warehouse space or a warehouse that is owned by a company operating an online marketplace, you are required to collect sales or use tax. This is not a new requirement, and the threshold of $500,000 in sales and 100 transactions stated in the Regulation does not apply in this situation. You must register, collect and remit sales or use tax as of the month you first had inventory in Massachusetts. Further, all of your Massachusetts sales (whether made from the Massachusetts inventory or not) were subject to Massachusetts sales or use tax as of the date that the inventory was first maintained in the state.
What should I do if an online marketplace collected sales or use tax on my behalf?
If you are required to collect Massachusetts sales or use tax, collection of the tax by the online marketplace will satisfy your obligation to collect tax only on the sales made through that online marketplace. If you made other Massachusetts sales, not through the marketplace, you are required to collect and remit sales or use tax on those transactions. Additionally, if the online marketplace sends you the collected sales or use tax related to your marketplace sales, you must also pay over all of that tax to the Department.
Filing a return
What is the tax rate that applies to my Massachusetts sales?
The sales or use tax rate in Massachusetts is 6.25% of the sales price. There are no local level sales or use taxes in Massachusetts.
How do I report tangible personal property or services sold for resale?
Sales of which the purchaser intends to resell the tangible personal property or services are reported in gross sales.
The seller must be given a Form ST-4: Sales Tax Resale Certificate from a potential buyer and retain it as proof the sale was exempt for the reasons stated on the certificate. Vendors can confirm the validity of a Form ST-4 online through MassTaxConnect.
Please note: A Certificate Form ST-1 or MT-1 does not serve as a substitute for the Form ST-4.
Select Verify a sales or meals tax certificate if you have any questions about the MassTaxConnect verification process.
How do I report items which are exempt from taxation?
Sales which are exempt from taxation are included in gross sales on Line 1. Exempt sales are then excluded in Line 2. Some exempt sales require the seller to obtain an exemption certificate. If a certificate is required, you must acquire the corresponding certificate and retain it as proof the sale was exempt. Massachusetts Sales and Use Tax Forms can be found here.
If all of my sales are exempt, do I need to file returns reporting zero tax due?
If you are required to register with DOR and you have no taxable sales, you must file an annual return reporting zero tax due.
Am I required to file a corporate excise return?
If you are required to file a sales tax return, you may also be required to file a corporate excise return.
|Last updated:||March 29, 2021|