Massachusetts sales tax guide
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We’re happy you chose to learn more about the Massachusetts sales tax by reading our Massachusetts sales and use tax guide. In this article, 1stopVAT‘s experts have put the most recent information on what is the sales tax rate in Massachusetts and how to collect it. If you have more questions about the sales tax or other tax-relation issues, please reach out to the 1stopVAT team for individual guidance.
Here’s what you should know about the sales tax in Massachusetts
A sales tax which is a substitute for VAT, is a tax that allows for business deductions and falls on the final purchaser. A seller of a good or a service charges the sales tax and is responsible for paying it to the responsible tax authority. In Massachusetts, such an authority is the Massachusetts Department of Revenue (MassDOR) – it administers the sales tax for Massachusetts and oversees the registration and compliance of the taxpayers. Keep in mind that in some instances, even remote sellers must become registered collectors of the sales tax Massachusetts.
To learn if a company has to collect the proper Massachusetts sales tax rates, one must determine if a nexus or a strong tie with the state is formed. As soon as such a tie is established, a company must register and add the sales tax to their prices.
Unlike many other states, Massachusetts only has a fixed Massachusetts sales tax rate and no local rates that typically make accounting for the sales tax more complex. In addition, some items in the state are exempt from the Massachusetts state sales tax. Therefore, you should check if your economic activity is taxable before starting operations. Keep in mind that payers of both sales and use tax Massachusetts have to stick to tax filing deadlines assigned by MassDOR.
Should my company register for Massachusetts sales tax (MA)?
Here are the essential legal criteria that signal that you must become a taxpayer in Massachusetts:
- Your company has a strong economic tie with Massachusetts (more – below)
- It sells taxable services or goods to Massachusetts residents
- The clients are required to pay sales tax by the state
Types of nexus in Massachusetts
Only after you confirm a nexus is established can you start adding the sales tax rate in Massachusetts to your prices. Pennsylvania sales tax rates from your clients. Here are the possible types of nexus in Massachusetts:
- Physical nexus is when a company has an office or other facilities in Massachusetts.
If selling remotely:
- Economic nexus in Massachusetts is formed when your gross exceeds USD 100 000 in the last 12 months. Unlike in other states, there is no transaction threshold for the number of sales made. Prior to 2019, Massachusetts sales tax percentage had to be charged when a company exceeded USD 500 000 in sales. The new threshold also applies to those companies that have formed the so-called cookies or software nexus while selling or leasing property or services to the residents of Massachusetts using an in-state software.
- Inventory in the state. If you store inventory for sale in Massachusetts, a nexus can be triggered.
- Representatives in the state. Having representatives soliciting orders for tangible personal property or telecommunications services in Massachusetts might trigger a nexus.
Taxable and non-taxable items in Massachusetts
Even though most companies want to quickly learn what is the current sales tax in Massachusetts, it is worth checking if the goods or services sold are taxable.
Like in the majority of the US, the general rule of thumb is that goods are taxable, and services are not. However, MassDOR provides an extensive list of items and services that are non-taxable, meaning that activities not on the list are responsible for including the sales tax rate Massachusetts in their prices.
Among tax-exempt items and services are: food and clothing, periodicals, tickets to sports or amusement parks, utilities, telephone services for residents, transportation, and such personal, professional services like accounting, legal work, haircuts, or car repairs.
There are also types of institutions that are sales tax-exempt, such as government agencies, manufacturers, or subcontractors.
Registering for Massachusetts sales tax online
Massachusetts is extremely friendly to online tax administration and allows registering and filling the tax on its dedicated website MassTaxConnect. The registration is free and quick. Both your personal and business details will be needed in the registration process. If you have trouble registering or finding out how much sales tax in Massachusetts you should pay, please contact 1stopVAT’s team for assistance.
How much is the sales tax in Massachusetts?
If you are a remote seller and wonder what’s the sales tax in Massachusetts you should add, keep in mind that Massachusetts sales tax is destination-based, meaning that you should always include the sales tax based on the address of your recipient.
However, the general Massachusetts state sales tax rate is 6.25 %. There are no local or municipalities sales tax rates Massachusetts. Please be reminded that the best way to have the latest information on how much is the sales tax in Massachusetts is by using our Sales Tax Calculator or contacting our team.
If only up to USD 100 is collected in a year, the Massachusetts tax sales can be accounted for yearly. Whereas bigger businesses that collect up to USD 1200 file the sales tax quarterly, and those exceeding this amount – monthly.
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