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Massachusetts Sales Tax Guide for Businesses

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We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Massachusetts, and if so, how best to tackle the sales tax situation in the Bay State.

After reading this, you’ll know:

  • Do you or don’t you need to collect Massachusetts sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Massachusetts sales tax!

Do you have sales tax nexus in Massachusetts?

Good news! You only have to begin thinking about Massachusetts sales tax if you have sales tax nexus in Massachusetts.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Massachusetts considers a seller to have sales tax nexus in the commonwealth if you have any of the following in the state:

  • An office, place of business, or any owned property
  • An employee present in the commonwealth for more than 2 days per year
  • Goods in a warehouse
  • Ownership of real or personal property
  • A sample or display area, such as a trade show exhibit
  • Delivery of property or performance of service in Massachusetts
  • Economic nexus (i.e. your sales or transactions into the state mean you are subject to the state’s economic nexus rule)

You can click here to read exactly what the Massachusetts Department of Revenue (Massachusetts’s taxing authority) has to say about what constitutes sales tax nexus in Massachusetts.

Do you have sales tax nexus in Massachusetts if you sell on FBA?

If you sell on Amazon FBA, you may have sales tax nexus in Massachusetts. Storing physical products in a state can create sales tax nexus, and Massachusetts is the home of at least one Amazon Fulfillment Center.

To determine whether or not you have items stored in an FBA warehouse in Massachusetts, you can do one of two things:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Try a 30-day free trial of TaxJar and we’ll show you the states from where your items are shipping with our Amazon badge feature

You may find that your inventory is stored in one or more of Massachusetts’s Amazon fulfillment centers:

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the United States.

Do you have economic nexus in Massachusetts?

Effective October 1, 2017, Massachusetts considers vendors who make more than $500,000 in sales annually in the state and more than 100 transactions in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Massachusetts’s economic nexus guidance for sellers here and you can read more about economic nexus in every state here.

Is what you’re selling even taxable?

You’ve probably read this far because you realized you have sales tax nexus in Massachusetts. Your next step is to determine if what you’re selling is even taxable.

Services in Massachusetts are generally not taxable. So if you’re an accountant or a beautician, you’re in luck and you don’t have to worry about sales tax. But watch out — if the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.

Tangible products are taxable in Massachusetts , with a few exceptions. These exceptions include clothing costing less than $175, most non-restaurant food and groceries, several health care and sanitation items, prescribed medical devices, and periodicals.

So if you sell shoes, then charge sales tax to your Massachusetts customers.

But if you’re an art instructor, don’t charge sales tax to your Massachusetts customers.

If you have sales tax nexus in Massachusetts and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Massachusetts

Sellers with sales tax nexus in Massachusetts must apply for a Massachusetts sales tax permit.

Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Massachusetts.

How to Collect Sales Tax in Massachusetts

So you’ve determined that you have sales tax nexus in Massachusetts and what you’re selling is taxable. And you’re all set and registered for your Massachusetts sales tax permit.

The next step is to determine how much sales tax to collect.

Massachusetts doesn’t have local tax rates, only a statewide tax rate of 6.25%. So you would simply charge 6.25% sales tax to buyers in Massachusetts

This is true whether you are based in Massachusetts or whether you are based in another state and have sales tax nexus in Massachusetts.

Not all states are this simple, though. You can look up any local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

Should you collect sales tax on shipping charges in Massachusetts?

Shipping is generally not taxable in Massachusetts as long as you separate shipping charges on a separate line item in the invoice or sale to your customer.

Read a full explanation of sales tax on shipping in Massachusetts.

When are Massachusetts Sales Tax Returns Due?

When you file and pay Massachusetts sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Massachusetts?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Massachusetts, you will be required to file and remit sales tax either monthly, quarterly, or annually.

How often you are required to file sales tax in Massachusetts follows this general rule:

Massachusetts sales tax returns are always due the 20th of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.

2018 Massachusetts Monthly Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

2018 Massachusetts Quarterly Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

2018 Massachusetts Annual Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

How to File Sales Tax in Massachusetts

When it comes time to file sales tax in Massachusetts you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment

We’ll walk you through these steps.

How to Calculate How Much Sales Tax You Owe in Massachusetts

Calculating how much sales tax you should remit to the state of Massachusetts is easy with TaxJar’s Massachusetts sales tax report.

All you do is connect the channels through which you sell — including Amazon, eBay, Shopify, Square and more — and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Massachusetts sales tax return will be waiting for you in TaxJar. All you have to do is login!

How to File and Pay Sales Tax in Massachusetts

You have several options for filing and paying your Massachusetts sales tax:

  • File online - File online at the Massachusetts Department of Revenue. You can remit your payment through their online system. Businesses with more than $5,000 in tax liability must use this method to file.
  • File by mail - Fill out and mail in form ST-9
  • AutoFile - Let TaxJar file your sales tax for you. We take care of the payments, too. You’ll never have to worry about spreadsheets, calculations or filling out complex sales tax returns.

Other Facts You Should Know about Massachusetts Sales Tax Filing

There are a few more things you should know about sales tax in Massachusetts:

Penalties:

  • Late Filing Penalty - 1% of the unpaid tax shown on the return per month, up to a maximum of 25%
  • Late Payment Penalty - Also, if you fail to pay the tax when due, interest will be charged at the federal short-term rate (which can change quarterly) plus four percentage points, compounded daily.

Other penalties for fraud or serial offenses include higher penalties and even criminal charges.

“Zero returns”:

Massachusetts requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Click here for a list of states that require zero sales tax returns.

And that’s it. You’ve mastered Massachusetts sales tax filing! Now that sales tax is out of the way, you can get back to what you do best — running your business.

Massachusetts Sales Tax Resources

For more about Massachusetts sales tax, check out the Massachusetts section of the TaxJar blog.

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