Massachusetts Sales Tax Handbook

RATE OF SALES TAX:

6.25%

LOCAL & COUNTY MAXIMUM RATES:

None

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Massachusetts.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Massachusetts.

All prescription medications, food, fuel, and apparel are tax-free.

In Massachusetts, certain services are subject to sales tax. View the list of tax-exempt goods on the Massachusetts Department of Revenue website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Massachusetts are not required to collect sales tax on the sale of digital products.

However, there is one exception to this restriction in Massachusetts. Businesses are required to collect sales tax on pre-written computer software offered online.

How to Register for Sales Tax in Massachusetts

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Identifying data about your company
Owners and officials of a company

Description of business operations

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Sales inside the state

It is simple to calculate sales tax on products sold in Massachusetts. Simply apply the 6.250% flat sales tax rate to all products, whether sold in-store or sent across the state.

Out-of-State Purchases

Massachusetts firms must only pay sales tax on out-of-state transactions if they have a physical presence in another state.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Massachusetts seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Massachusetts are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Annual filing: If your company collects less than $8.33 in sales tax each month, you should submit returns on an annual basis.
Quarterly filing: If your company receives between $8.33 and $100 in sales tax each month, you should choose to submit quarterly reports.
Monthly filing: If your company receives more than $100 in sales tax every month, you must submit returns on a monthly basis.

Deadlines for Filing

The deadline for all Massachusetts sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:

Penalties for Filing Late

Massachusetts has a late filing penalty of 1% every month or partial month, with a maximum penalty of 25% of the tax stated on the tax return. If this punishment is imposed, no additional penalty will be imposed.

Massachusetts additionally imposes a late filing penalty of 1% per month, up to a maximum of 25% of the tax that has been submitted but remains unpaid.

The state charges an interest rate on any unpaid sales tax that is based on the federal short-term rate plus an extra 4%, compounded daily. This rate is subject to change every quarter.