Massachusetts is a destination-based state (sales are taxed where the buyer is located).
- Sales tax is charged on the sales price or rental charge of tangible personal property (TPP)
- For manufacturers, purchases used for production aren’t taxed
- For distributors, items purchased for resale aren’t taxed
Businesses may file in the following ways:
The state sales tax is 6.25% with no additional local or county sales tax.
Most unprepared food items are exempt from the sales tax, while restaurant meals are fully taxable.
Business activites that establish a tax presence in Massachusetts include:
- Maintainig a business location in Massachusetts
- Employing labor
- Owning property
- Executing contracts or enforcing contract rights
- Haing representatives who install, assemble, or service products in the state
- Broadly, “renting, leasing, buying, selling, or procuring services or tangible property”
Economic nexus in Massachusetts:
- According to state law, out-of-state sellers whose sales into Massachusetts exceed $500,000 gross revenue and 100 separate transactions in the preceding calendar year are required to register with the state, collect sales tax on sales to Massachusetts, and remit that sales tax to the state if the seller also performs one of the following:
- Establishes "Cookie nexus" in Massachusetts
- Uses in-state servers or services
- Performs in-state payment processing, order fulfillment/management, or return processing
- Read more detail in section 1(b)(2) of the state law
- Effective date: Oct. 1, 2017
Find more information about nexus in Massachusetts.
Payment and returns are due within 20 days after the end of the filing period.
Filing frequency is determined by the amount of tax collected as follows:
- Annual Filers: $100 or less
- Quarterly Filers: from $101 up to $1,200
- Monthly Filers: $1,200 or more
Register online for a Sales and Use Tax Registration Certificate (Form ST-1) for each business location. The form must be displayed on the business premises and be visible to customers.
Penalties charged for missing the due dates are as follows:
- Late payment: 1% of the unpaid tax shown on the return per month, up to a maximum of 25%
- Late filing: 1% of the balance due per month, up to a maximum of 25%
You'll also be charged interest at the federal short-term rate (which can change quarterly) plus 4%, compounded daily.
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