The place to find business sales tax information

— as well as solutions, services and jobs!

Massachusetts Sales Tax: Five Things You Should Know

author photo of Sylvia F. Dion

Massachusetts and sales tax! If you’re reading this blog post – then Massachusetts sales tax is likely a state that you have questions about, need help with or are simply interested in.

As a Massachusetts based State and Local Tax (SALT) consultant, I can tell you it’s a state that can seem intimidating – after all, Massachusetts is often jokingly referred to “Taxachusetts.”

But for all the worries you might have about Massachusetts’ complex tax laws or aggressive audit process, in some ways Massachusetts keeps things simple when it comes to sales tax.

So in this post I’ll highlight five things you should know about Massachusetts sales tax. While many of the ones I mention below deserve their own “Massachusetts Sales Tax” post (and I promise you, I’ll revisit some of these topics in much more detail in the future), for today, here’s a snippet of five relevant Massachusetts sales tax facts.

1. If You’re Selling (or Purchasing) a Taxable Product or Service in Massachusetts, There’s Only One Rate That Applies - the State’s 6.25% Sales Tax Rate

Many tend to think Massachusetts sales tax is complex, but when it comes to its sales tax rate structure, it’s about as easy as it can get. Massachusetts imposes a flat state rate of 6.25% on the sales or rental of tangible personal property and one category of services (more on that in a bit). The use tax, which folks are supposed to self-assess and pay to the state on those “tax-free” internet, mail-order and phone purchases, is also 6.25%. Massachusetts’ local jurisdictions – cities, towns, and counties – do not impose a separate local jurisdiction sales tax (however local jurisdictions do have the option of imposing a local option meals tax). So if you’re selling (or purchasing) a taxable product or service in Massachusetts the only rate that applies is the 6.25% state sales tax rate.

2. There’s Only One Type of Service That’s Subject to Massachusetts Sales Tax

While many states tax a whole variety of services, there’s only one type of service that is taxable in Massachusetts – telecommunications services. That’s right – in general, services are not taxable in Massachusetts. And if history stands, that’s likely not to change. You see, back in the summer of 2013, Massachusetts enacted a law that expanded the sales tax base to computer system design and software modification services. And what a ”tech-tax” fiasco that caused! Needless to say, the unpopular law was retroactively repealed less than two months after it was enacted leaving telecommunications to remain the sole taxable service in Massachusetts. But Massachusetts defines “telecommunications services” fairly broadly. How broadly? Well, that’s a topic for a future post.

3. Pre-written Software is Subject to Massachusetts Sales Tax Regardless of How Delivered

Now here’s a very interesting topic – how Massachusetts taxes software. Things are pretty straightforward when it comes to pre-written (also known as canned or ‘off-the-shelf’) software. It’s taxable in Massachusetts regardless of how it’s delivered - via tangible medium, e.g., CD or disk, or via download. But what about pre-written software obtained via a license? Or the transfer of the right to use software installed on a remote server? Or pre-written software upgrades? According to the Massachusetts Computer Industry Services and Products regulation, these are all subject to sales tax. And here’s one more - the transfer of pre-written software bundled with a non-taxable service? Whoa – now we’re really talking a topic deserving of its own post! (So check back soon!)

4. Massachusetts is Not a Member of the Streamlined Sales and Use Tax Agreement (SSUTA)

I’m often asked by clients if Massachusetts is a Streamlined Sales Tax (SST) state – that is, whether Massachusetts is one of the 24 states that are members of the Streamlined Sales and Use Tax Agreement (SSUTA). The answer is “no” - Massachusetts is not an SST state and here are a few reasons why this is important: 1) A taxpayer with sales tax nexus to Massachusetts can’t register through the SST’s Central Registration portal, 2) Massachusetts will not accept an SST exemption certificate, and 3) if federal remote seller legislation, such as the Marketplace Fairness Act (MFA), passes, it will be a while before Massachusetts would be entitled to “collection authority” since Massachusetts would need to adopt and implement the MFA’s alternative simplification requisites. (Want to read more about the MFA and Internet Sales Tax developments? I invite you read my Internet Tax/e-Commerce posts at SalesTaxSupport’s “Issues” blog.)

5. Massachusetts Does Not Have a “Click-Through” Nexus Law

While it may seem surprising to some (given the “Taxachusetts” perception), Massachusetts has not enacted a “click-through” nexus provision. That is, Massachusetts does not have a provision in its law which attributes nexus to an out-of-state seller that contracts with an in-state marketing affiliate that refers customers to the out-of-state seller’s site via a web-link. Yes, there have been “click-through” nexus proposals introduced in Massachusetts, including several a few years back, which along with Amazon’s “expansion” in Massachusetts had many confused about whether a ”click-through” nexus provision had been or would be enacted in Massachusetts. (For a little more background on this, see my prior post, “Amazon Sales Tax Nexus in Massachusetts? (Absolutely Not!)”) That’s not to say that Massachusetts does not have an aggressive nexus policy, it’s just to say that are far as a “click-through” nexus provision goes – there isn’t one on the Massachusetts books as of yet! (For more on “click-through nexus and Amazon Laws, see my prior post, “Amazon Laws Are Not All Created Equal”)

So there you have it – five things to know about Massachusetts sales tax. I think you’ll agree, there’s certainly a lot more to know. So if Massachusetts sales tax issues and developments are your thing, then come on back – I’ll be sharing my insights as a Massachusetts SALT consultant and reporting on Massachusetts sales tax developments.

Finally, if you have questions, comments or ideas for future “Massachusetts Sales Tax” posts, I invite you to post a comment below.

About the Author: Sylvia F. Dion, MPA, CPA, is the Founder and Managing Partner of SALT Consulting firm, PrietoDion Consulting Partners LLC. Sylvia has been covering Internet Sales Tax developments for SalesTaxSupport’s Issues blog since 2011. Sylvia is also the “U.S. Sales Tax for Foreign Sellers” contributor for SalesTaxSupport’s Industry blog and the “Massachusetts Sales Tax” contributor for SalesTaxSupport’s State blog. You can follow Sylvia on twitter and on Google+ and can contact Sylvia via e-mail at sylviadion@prietodiontax.com or at 978-846-1641.

Comments or questions may be submitted by using the on-page "Comment" feature, subject to disclaimer at bottom of page. Other contact options (and Consultation Requests) are also available on Sylvia's associated Firm Profile page.

Other recent “Massachusetts (MA)” posts by Sylvia F. Dion, CPA:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.

Comments

90 Responses to Massachusetts Sales Tax: Five Things You Should Know

  • Posted by Larry on May 5, 2017 12:09pm:

    Hi Sylvia,

    Great article. I have one question that I never got a straight answer to. I do IT Consulting. I sell online services and I cannot seem to get a straight answer as to whether or not they should be taxed. Specifically it work like this. You can download the software for free (usually as a trial), but then in order to get the cloud part to work you have to pay for a subscription. As more stuff moves to the cloud this is going to be a bigger issue for me.

    Thanks,

    Larry

    • Posted by Author photo of Sylvia F. DionSylvia Dion on May 7, 2017 7:12pm:

      Larry,

      Hello and thank you for your kind comment and your question.

      The general rule in Massachusetts is that a subscription that allows a customer to access software in the cloud is considered a sale of prewritten software and subject to Massachusetts sales tax. The Massachusetts Computer Industry Services and Products Regulation clearly says that "sales in Massachusetts of ... prewritten computer software, regardless of the method of delivery... are generally subject to the Massachusetts sales tax". This regulation says this includes transfers of rights to use software installed on a remote server. Also, the Massachusetts DOR has issued several letter rulings making it clear that SaaS is subject to sales tax. For instance in this letter ruling http://www.mass.gov/dor/businesses/help-and-resources/legal-library/letter-rulings/letter-rulings-by-years/2012-rulings/lr-12-10.html, the Massachusetts DOR said that "charges for prewritten software, whether it is electronically downloaded to the customer or accessed by the customer on the seller’s server (including the “Software as a Service” business model) are generally taxable. The marketing description of a product as “software-as-a-service” does not determine taxability of that product, nor does the fact that customers do not download software or otherwise install software on their own computers or other devices."

      You mentioned that you have not been able to get a straight answer. I should stress that you CAN get a definitive answer by requesting a private letter ruling from the DOR's Rules & Regulations Bureau, RulesandRegs@dor.state.ma.us. If you need an absolute answer you should consider a letter ruling as failing to charge sales tax could result in a big liability to you later.

      You can contact the Bureau directly. Also, if you need a tax advisor to present your case and submit a ruling request to the Bureau on your behalf, feel free to contact me via my services page here at SalesTaxSupport.com http://www.salestaxsupport.com/sales-tax-directory/services-and-consultants/prietodion-consulting-partners-llc/

      Thanks again.

  • Posted by Lauri on April 11, 2017 2:18pm:

    Hello, Silvia -
    A couple of questions. We are incorporated in DE and registered as foreign corp and operate in WA state. We are considering hiring an MA state employee which I understand creates sales tax nexus in MA for our company. Our product is Software as a Service - licensed access to our software stored on a remote server/cloud (AWS). From an earlier comment, I believe that would subject us to sales tax within the state of MA. Appreciate any insights you might share --

    • Posted by Author photo of Sylvia F. DionSylvia Dion on May 6, 2017 9:24pm:

      Lauri,
      Hello. Thank you for reading my blog post and for your comment/question.

      Yes, you are correct that having an employee in Massachusetts creates an in-state presence and sales tax nexus for your company. So that is a definite.

      Also, you are correct that your SaaS product which allows subscribers to access your remotely stored software is subject to Massachusetts sales tax. The Massachusetts Computer Industry Services and Products Regulation clearly says that "sales in Massachusetts of ... prewritten computer software, regardless of the method of delivery... are generally subject to the Massachusetts sales tax". This regulation says this includes transfers of rights to use software installed on a remote server. Also, the Massachusetts DOR has issued several letter rulings making it clear that SaaS is subject to sales tax. For instance in this letter ruling http://www.mass.gov/dor/businesses/help-and-resources/legal-library/letter-rulings/letter-rulings-by-years/2012-rulings/lr-12-10.html, the Massachusetts DOR said that "charges for prewritten software, whether it is electronically downloaded to the customer or accessed by the customer on the seller’s server (including the “Software as a Service” business model) are generally taxable. The marketing description of a product as “software-as-a-service” does not determine taxability of that product, nor does the fact that customers do not download software or otherwise install software on their own computers or other devices."

      Hope this helps. If you need professional guidance in this area, please feel free to contact me via my professional services page here at SalesTaxSupport: http://www.salestaxsupport.com/sales-tax-directory/services-and-consultants/prietodion-consulting-partners-llc/

      Thank you again.

  • Posted by Samuel on April 6, 2017 9:05pm:

    Hello, thank you for the article. Based on some bad information I think I am in trouble. I make custom props for fancy parties but the client never keeps the item so I thought I was selling a service and wasn't charging sales tax. Also, we do some home repairs for a moving company but charge labor only. What do I need to do to get back on track, what should I be charging for sales tax in these cases and how do I report what I should've done so I can come clean and owe what I might owe instead of taking a chance and the government finding it later? Kind of a loaded question but any advice would be helpful. Thank you

  • Posted by Ally on March 29, 2017 8:16am:

    Is there a minimum purchase amount for what needs to be claimed by companies? For example, do we only need to claim purchases over $100? Or does even an amazon purchase of $8 need to be on the form?
    thanks!

    • Posted by Author photo of Sylvia F. DionSylvia Dion on May 7, 2017 7:22pm:

      Ally,
      Hello and thank you for your comment/question.

      Technically (according to the statute) any purchase of any amount of a taxable product on which the vendor did not charge sales tax, is subject to the Massachusetts use tax at the same 6.25% sales tax rate. So there is no threshold - sales tax must be assessed and remitted on all taxable purchases on which sales tax was not charge.

      Hope this helps.

  • Posted by Maureen on March 28, 2017 6:39am:

    Hi Sylvia,
    We are a New Hampshire company with no physical presence in Massachusetts. When we go into the State of MA to repair a customer's piece of equipment and/or sell them product, we always collect MA sales tax. My question is, when we ship product out of NH, into MA - via UPS or common carrier, NOT our trucks, are we obligated to charge sales tax on the product?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on May 7, 2017 7:30pm:

      Maureen,
      Thank you for your comment/question.

      I know this may come as a surprise, but sending your employees into Massachusetts to solicit sales and repair equipment IS considered a physical presence according the Massachusetts rules. These activities create Massachusetts sales tax nexus for your New Hampshire company. Often people think that having a physical presence means having an actual office or employees it the state, but even the most minimal activity being performed in a state can create a physical presence.

      So since your New Hampshire company has nexus in Massachusetts, you are required to charge, collect, report and remit Massachusetts sales tax on sales that are shipped to Massachusetts customers regardless of the method of delivery.

      Hope this helps.

  • Posted by Erica on March 13, 2017 8:58am:

    Hi Sylvia!
    I have a question regarding a used vehicle I'm purchasing in Rhode Island. The dealer also has a garage and told me because of this that I could pay sales tax on the car to him and he would give me a paper to bring to the RMV, I guess stating I paid taxes on the vehicle. I live in MA and will be registering the car in my state so it's my understanding that I would need to pay sales tax on the vehicle to register either way... not to mention RI's sales tax is higher, at 7%. So would I be correct in telling him no thanks and paying the MA sales tax when registering like I would if it were an instate car purchase? Thanks in advance!

  • Posted by Nick on March 1, 2017 12:20pm:

    Hello, I have a company based in NH. Currently we are looking into doing a job in MA. Would we be required to pay sales tax on materials bought in NH and used in MA?

  • Posted by elena on February 16, 2017 11:53am:

    Hello Sylvia,

    I am an interior designer in MA. I charge sales tax to my clients for all purchases being resold (furniture, upholstery labor, etc.). I charge my clients on an hourly basis. Should I be charging sales tax for the hours spent on the project or no? Thank you in advance for your help!

  • Posted by Prazey on February 6, 2017 7:21pm:

    I am a business owner from Florida selling to a customer in Massachusetts. I am buying goods from a wholesaler in Indiana and selling it to my customer in Massachusetts. I Does that establish nexus in MA? Do I have to charge sales tax on my invoice to my customer?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on May 7, 2017 7:41pm:

      Prazey,

      Hello and thank you for your comment/question.

      First just having a customer in Massachusetts or just having your Indiana supplier ship to your Massachusetts customer, does not create sales tax nexus in Massachusetts (but there many activities that can create nexus in Massachusetts).

      BUT if you are buying from an Indiana wholesaler that is "drop-shipping" (shipping goods directly to your customer) and that Indiana wholesaler is registered for Massachusetts sales tax purposes, then the Indiana wholesaler is required to charge you sales tax on the order. Here is another blog article I wrote on the Massachusetts drop-ship sales tax rules that you might find helpful: http://www.salestaxsupport.com/blogs/state/massachusetts/ma-exemption-certificates-drop-shipper-catch-22/

      You should also know that you cannot charge your Massachusetts customer sales tax unless you are registered in Massachusetts. So even if the wholesaler charges you Massachusetts sales tax, you cannot recoup this amount by charging your customer sales tax unless you are registered in Massachusetts for sales tax purposes.

      Hope this helps.

  • Posted by Mike on February 1, 2017 2:27pm:

    If I provide a paint mixing service, and would sales tax apply?

    For example, a customer wants a specific color using Benjamin Moore as a base. Would the customer have to purchase and physically give me the base and paint coloring for me to mix and deliver back in order for what I do to be classified as a service? Or can I purchase the base paint and coloring using deposited funds from the customer and simply charge a fee for mixing for what I do to be classified as a service?

    • Posted by Author photo of Sylvia F. Dionsylviadion on February 2, 2017 8:14pm:

      Mike,
      Thank you for reading my post and your question/comment.

      As you can guess, you're in one of those gray areas where if you provide both the paint and the service, you might be considered subject to the Massachusetts sales tax. What you first describe - just providing a color mixing service, would most likely not be considered taxable as this would appear to be a pure service transaction. However, when you bring in that you are also purchasing the paint, mixing it and the providing the mixed paint to the customer, this could be viewed as more than just a service and your entire charge could be subject to Massachusetts sales tax. If it's an issue you really want to nail down, I'd suggest contacting the Massachusetts Rules & Reg bureau at: RulesandRegs@dor.state.ma.us.

  • Posted by Jim on January 31, 2017 1:25pm:

    Can you tell me what property (inventory) and/or sales taxes obligations are created in Massachusetts by shipping food products into the state to food processing plants? Also what will be the obligations if a warehouse is located in the state?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on February 2, 2017 8:21pm:

      Jim,
      Thank you for reading my post and your comment/question.

      In general, having inventory stored in Massachusetts would create nexus for sales tax purposes (you mentioned shipping food products into Massachusetts for processing, so i assume you mean that you would have inventory in the state). Also, owning or leasing real property, such as a warehouse, would also create nexus for Massachusetts sales tax purposes.

      So without knowing more specifics about your situation, I would say you are likely to be creating nexus for Massachusetts sales tax purposes based on what you describe.

      I'm not sure what property tax obligations would be created.

  • Posted by John on December 14, 2016 1:32pm:

    Being out of MA - what options I have for getting my auction purchases without the sales tax? I have been told that the only way is to use MC/DOT carrier.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on January 1, 2017 2:30pm:

      John,
      Thank you for reading my post and your comment/question.

      As is often the case with state tax laws, the answer is not always straightforward. So it's not 100% definite that using a MC/DOT carrier would exempt the auction purchase from Massachusetts sales tax.

      Massachusetts does have a specific Regulation on Out-of-State Sales and Deliveries (found at: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h67-out-of-state-sales-and-deliveries.html ) There are several examples in the Regulation which describe various scenarios which illustrate that whether the sale of the item is subject to Massachusetts sales tax depends on much more than what type of carrier is used. Whether Massachusetts sales tax would apply is also impacted by whether the purchaser is in Massachusetts when they make the purchase (even if they direct that the item be delivered out of state), whether title and possession transfers to the purchaser in Massachusetts (the transfer of possession to the purchaser can be deemed to occur when the property is transferred to the common carrier), or what the contract itself says.

      So my suggestion is to take a good read of the Regulation I linked to above. Also, see what the contract with the auction house says about subjecting sales for property delivered out of state to sales tax. I'd also suggest contacting the Massachusetts DOR at 617-887-6367 or toll-free at 800-392-6089 for more guidance.

  • Posted by Erica on December 2, 2016 1:55pm:

    Hello Silvia,
    Your information is such a relief after long searches! I still have some questions. I am a metal fabricator that has nexus in MA. I had been advised by my previous MA accountant (when my biz was in MA) that I didn't need to charge sales tax on work that was part of a bigger project (I fabricate a table base designed by an architect, the architect has a woodworker make the top that goes on the base). Does this effect how to charge sales tax? Another question is if it matters if I'm being paid by the architect or by their end client? Another is does it matter if a piece I make is screwed to the wall/permanent, or free standing? Another question is does it matter if I deliver it or if it is mailed (from Maine)? How about if it is my design, or if I'm fabricating to someone else's design? I've heard various answers to these different scenarios, so am thoroughly confused. Thank you!

    • Posted by Author photo of Sylvia F. DionSylvia Dion on December 13, 2016 11:41am:

      Erica,
      Thank you for you kind comment and your question/comment.

      I will start off by saying you have touched on one of the more "grey" areas in Massachusetts sales tax - and I can understand why you have received some inconsistent answers. On one hand the Massachusetts regulation on services enterprises specifically says that fabrication is subject to sales tax. However, if you are fabricating a component part for a customer who will in turn sell the finished product to THEIR customer, then even if your fabrication work is taxable, your customer can provide you a Massachusetts exemption certificate so that you do not have to charge sales tax. And on the other hand, if you are affixing your product to real estate, you may be considered a "contractor" for Massachusetts sales tax purposes (in which case you would be considered the final consumer of all materials and supplies you use in completing the contract and would be liable for sales tax on those materials and supplies). Since you have several scenarios you present - and as I mentioned, you really are dealing with a grey area, I would strongly suggest sending in a Ruling Request to the Massachusetts Rules and Regulations Bureau at: RulesandRegs@dor.state.ma.us I would not suggest calling the general number because your situation is too specific and you need more definitive answers. This is the approach I recommend to all my clients when the law is grey and a definitive answer needs to be obtained (such as where their is a large liability at stake). A ruling (reply) from the DOR is binding on the DOR. Without a definitive answer, you may or may not be applying things correctly and in an audit, you would have the burden of proving you did things correctly.

      BTW, this is a service I provide if you interested.

      Hope this helps.

      • Posted by Erica on December 13, 2016 3:05pm:

        Thank you Sylvia - I have had yet to come across this option, a 'Ruling Request'. Perfect. Thank you so much. I'll be in touch if it looks like I will need assistance with filing.
        best

    • Posted by Author photo of Sylvia F. DionSylvia Dion on December 13, 2016 11:41am:

      Erica,
      Thank you for you kind comment and your question/comment.

      I will start off by saying you have touched on one of the more "grey" areas in Massachusetts sales tax - and I can understand why you have received some inconsistent answers. On one hand the Massachusetts regulation on services enterprises specifically says that fabrication is subject to sales tax. However, if you are fabricating a component part for a customer who will in turn sells the finished product to THEIR customer, then even if your fabrication work is taxable, your customer can provide you a Massachusetts exemption certificate so that you do not have to charge sales tax. And on the other hand, if you are affixing your product to real estate, you may be considered a "contractor" for Massachusetts sales tax purposes (in which case you would be considered the final consumer of all materials and supplies you use in completing the contract and would be liable for sales tax on those materials and supplies). Since you have several scenarios you present - and as I mentioned, you really are dealing with a grey area, I would strongly suggest sending in a Ruling Request to the Massachusetts Rules and Regulations Bureau at: RulesandRegs@dor.state.ma.us I would not suggest calling the general number because your situation is too specific and you need more definitive answers. This is the approach I recommend to all my clients when the law is grey and a definitive answer needs to be obtained (such as where their is a large liability at stake). A ruling (reply) from the DOR is binding on the DOR. Without a definitive answer, you may or may not be applying things correctly and in an audit, you would have the burden of proving you did things correctly.

      BTW, this is a service I provide if you interested.

      Hope this helps.

  • Posted by Bill on November 29, 2016 3:41pm:

    Hi Silvia,

    I am a jeweler in Mass. My question relates to sales tax due on a purchase with trade in, ie: Customer buys a $5,000 item with $2,500 check and $2,500 trade in value for an item of her personal jewelry---Is the tax figured on the $5,000 or the $2,500 net due (after the trade in)?

    • Posted by Author photo of Sylvia F. Dionsylviadion on December 13, 2016 1:54pm:

      Bill,
      Thanks for your question/comment.

      You would need to calculate sales tax on the full $5,000 sales price of the jewelry item.

      Mass. Gen. L. ch. 64H, §1 defines ''sales price'' as the total amount paid by a purchaser to a vendor as consideration for a retail sale, valued in money or otherwise.

      Trade-ins are generally included in gross receipts for sales and use tax purposes in Massachusetts (except for trade-ins of motor vehicles, boats, and airplanes). A trade-in is defined as a previously purchased item transferred to a vendor as full or partial consideration for the purchase of another item.

      So, Massachusetts would say you have sold an item with a sales price of $5,000 for which you received $5,000 ($2,500 in cash and another $2,500 in the form of property valued at this amount) and would expect you to charge and collect 6.25% Massachusetts sales tax on this full amount.

      Hope this helps.

  • Posted by Liz on November 25, 2016 4:58pm:

    Hi,

    I was looking into setting a shop up on etsy and it's really confusing trying to figure out what I need to do to be compliant. Do I need to set up a dba in my town? And do I need to be set up with a mass sales ID before I set up on etsy? It seems like a big expense for something that's been a hobby and I'm not sure will even go anywhere on etsy.

    • Posted by Author photo of Sylvia F. Dionsylviadion on November 26, 2016 12:08pm:

      Liz,

      Thank you for your question/comment.

      In general, if you will be selling goods on Etsy, then yes, you need to register with the Massachusetts DOR for sales tax collection purposes (i.e., apply for a sales tax permit). There is an exception from the requirement to register/collect sales tax if your sales qualify as "casual or isolated" sales. However, just because you view this is a hobby, that does not mean your sales would be viewed as casual or isolated by the Massachusetts DOR. Here is link to the Massachusetts regulation on casual and isolated sales: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h61-casual-and-isolated-sales.html Generally, casual and isolated sales occur in situations such as when a business that is going out business is selling its assets, or when an organization is making sales for fundraising purposes.

      Also, you do not need a DBA to register for a Massachusetts sales tax permit. I'd suggest contacting the Massachusetts DOR at 617-887-6367 or toll-free at 800-392-6089 for more guidance.

      Sylvia

  • Posted by Maggie on November 15, 2016 11:53am:

    Hello Silvia,
    I am an artist and I do a lot of commissioned and freelance painting, design, and illustration. I am being hired to conceive of and create a specific piece of art.
    I paid sales tax on the supplies--do I charge sales tax on the artwork, or do I treat it as labor?
    I have recieved a lot of contradicting information on this issue and needless to say, I'm super confused at this point.
    Thank you,
    Maggie

  • Posted by Peter on November 2, 2016 2:51pm:

    Hi Sylvia, I am having a NH based contractor come down to MA and install a new granite kitchen countertop. Will I had to pay him MA sales tax for the job? Since he is in NH, he pays no sales tax for materials. Thank you.

    Peter

    • Posted by Author photo of Sylvia F. DionSylvia Dion on November 26, 2016 1:53pm:

      Peter,
      Thanks for your question/comment.

      First, you mention having a NH based contractor perform the installation of your granite countertop. Is the contractor the retailer of the granite countertop? Or is the NH contractor just someone you hired independently for installation services?

      If the contractor is also the granite countertop retailer, then the contractor/retailer would need to charge you sales tax as he is transferring tangible personal property (the countertop) in conjunction with the installation. But if you purchased the countertop from a separate retailer and you hired the contractor independently for his installation services only, then the contractor would not charge you sales tax on his services but you would be required to pay use tax on purchase price of the countertop if the granite countertop retailer did not charge you sales tax.

      Hope this helps.
      Sylvia

  • Posted by joseph on October 28, 2016 9:45am:

    is the additional money paid for a "Warranty" on a product taxable?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on October 28, 2016 8:39pm:

      Joseph,
      Thank you for your comment/question. Warranties are not taxable in Massachusetts. You'll find this in §64H.1.1(5)(g) of the Massachusetts Services Enterprises Regulation: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h11-service-enterprises.html

      I hope this was helpful.

  • Posted by Mike on October 24, 2016 11:30am:

    Hi Sylvia, I have been reading your responses with great interest and will have to ask you a question.
    Today, a major Jeweler in MA charged sales tax on repair of one gold earring. They had to solder the stem back on. The receipt clearly states REPAIR. No charges for materials etc.
    I protested but they told me that because they have used solder to put it back on they are required to charge sales tax.
    I still think they are wrong. Maybe you can enlighten me.

    Thank you in advance.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on October 28, 2016 9:03pm:

      Mike,

      Thank you for reading my post and your question/comment.

      The Massachusetts Services Enterprises regulation states that a service transaction is subject to the sales tax where the transfer of tangible personal property occurs, and the charge for the property is stated separately from the charge for labor on the bill to the customer (whether or not the value of the property is inconsequential) OR the transfer of tangible personal property occurs, and the value of the property is MORE than inconsequential in relation to the total charge, and the charge for the property is not separately stated on the bill to the customer.

      The regulation adds that the term "inconsequential" means a value of less than 10 percent of the total charge, and the term "not inconsequential" means a value of greater than 10 percent of the total charge and adds that this definition serves only as a guideline, and varies depending on the facts and circumstances of the transaction

      In your situation it sounds like the jeweler issued a bill for one charge - service. But the jeweler may have considered the soldering material to be tangible personal property which was transferred in conjunction with the service and the value of the soldering material not to be inconsequential in relation to the total charge (the value of the of the soldering material was more than 10% of the total charge).

      Overall, I'm not sure I would consider a tiny amount of soldering material to be an inconsequential transfer of personal property (cause really - how much did they use to do the soldering) and I would most likely have questioned the charge also.

      Definitely one of those gray areas.

  • Posted by June on September 30, 2016 8:31am:

    Good Morning,

    I am a jewelry crafter from NH and was invited to have a booth in a MA fair. This will be my first time selling in MA, and I am not sure if I should be charging/collecting sales tax on the items I sell. NH has no sales tax, so I have not had to worry about it. Any assistance is greatly appreciated!
    All the best,
    June

    • Posted by Author photo of Sylvia F. DionSylvia Dion on October 2, 2016 2:34pm:

      June,
      Thank you for your comment/question.

      Yes, you will be required to charge and collect Massachusetts sales tax on the items you sell at the Massachusetts craft fair. In order to charge and collect Massachusetts sales tax you will need to register via the MassTaxConnect system. See my prior blog about the MassTaxConnect system: http://www.salestaxsupport.com/blogs/state/massachusetts/masstaxconnect-5-things-massachusetts-sales-tax-filers-should-know/ The craft show promoter should have made you aware of this requirement as the Massachusetts law requires every participate in the trade show/craft fair to provide the promoter with their Massachusetts ST-1, Sales and Use Tax Certificate. A promoter who does not receive an ST-1 from a participant is not supposed to allow the participant to sell at their event. Here is a link to Massachusetts guidance on the requirements imposed on trade show and similar event promoters: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/tirs/tirs-by-years/2010-releases/tir-10-21-trade-show-and-flea-market-promoters.html

      So you'll want to make sure you register prior to the event. I hope this was helpful.

      Sylvia

      • Posted by June on October 3, 2016 5:56am:

        This helps immensely! Thank you!

        • Posted by Author photo of Sylvia F. DionSylvia Dion on October 12, 2016 6:38pm:

          June, you are welcome! And good luck at the craft fair.

  • Posted by Steven on September 25, 2016 4:22am:

    Does MA have a labor sales tax?
    e.g. Having Staples charge a separate fee for assembling a office furniture item, fine, no issue there, however then also taxing it at the sales tax rate, separate of, and in addition to, the sales tax charged for just the purchase of the item.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on October 2, 2016 3:32pm:

      Steven,

      Thank you for your question/comment.

      In general, if you were purchasing a service by itself then Massachusetts sales tax would not apply. However, because there is a transfer of tangible personal property (office furniture) in conjunction with the assembly service, then yes, it is correct to apply sales tax to the service portion in addition to the applying sales tax to the sale price of the office furniture being purchased. The Massachusetts regulation on Services Enterprises states that "A service transaction is subject to the sales tax where the transfer of tangible personal property occurs, and the charge for the property is stated separately from the charge for labor on the bill to the customer, whether or not the value of the property is inconsequential." Again, if you were purchasing a stand-alone service, then sales tax would not apply, but because the service is in conjunction with the purchase of the office furniture, then it is subject to Massachusetts sales tax.

      I hope this was helpful.
      Sylvia
      Sylvia

  • Posted by Lisa on August 29, 2016 12:44pm:

    Are furniture re-finishing fees subject to MA Sales Tax?

    • Posted by Author photo of Sylvia F. Dionsylviadion on September 3, 2016 9:03pm:

      Lisa,
      Thanks for your comment/question.

      I would recommend contacting the Massachusetts Department of Revenue with your question. You see, it is quite possible that the service you are asking about would be considered "Fabrication". The Massachusetts Regulation on Service Enterprises defines fabrication as "any change in the form or substance of tangible personal property, or any substantial alteration in the form or shape of an existing article of tangible personal property where either party to the transaction furnishes the material, is a fabrication under this regulation. Reupholstered furniture and custom made draperies are examples of a fabrication." The regulation clearly states that reupholstering of furniture is a fabrication subject to sales tax but does not address furniture refinishing. You can reach the Massachusetts Department of Revenue at 617-887-6367 or 800-392-6089.

      Best of luck.

  • Posted by Jeannine on August 25, 2016 6:59am:

    Must a Massachusetts manufacturer be registered for sale/use in Massachusetts in order to use an ST-12 for exemption.

    thanks

  • Posted by Debi on August 23, 2016 2:18pm:

    I am trying to get a straight answer. I recently joined a direct sales company based in Michigan. We will be selling products that are purchased through them. We collect Mass State sales tax on these products and submit payment to that company. Do they pay the sales tax portion to the State of Mass? Do we as independent consultants apply for a sales tax number? No one can answer my question.

  • Posted by Leeanne on August 21, 2016 2:23pm:

    I am a graphic designer/sign maker. I recently started my own business and am confused on charging MA tax on labor... I understand not to charge on the design and to charge on tangible items like business cards/letterhead that I contract another business to print for me. But I had a customer question a quote of lettering applied to his vehicle. I am providing a tangible item-vinyl lettering- and quoted the job as an all inclusive lettering and install(labor) which I taxed the total amount. I obtained this customer from a previous employer of mine which we did work for his last vehicle. That employer was in deep trouble with the IRS concerning taxes and I dont want to make same mistake. I am fairly new business and want to start out on the right foot. Any help is greatly appreciated

  • Posted by John on August 4, 2016 3:27pm:

    I am a NY company that delivers and sometimes installs home appliances in MA. Are delivery and installation charges taxable in MA? In some situations we sell to the customer that will use them, in others, we sell to contractors and real estate developers.

    Thank you.

  • Posted by Donna on July 21, 2016 3:48pm:

    Is there sales tax on labor (for reupholstering chairs) in Massachusetts?

    • Posted by Author photo of Sylvia F. Dionsylviadion on July 30, 2016 9:21pm:

      Donna,

      Than you for reading my post and your comment/question.

      In general, when it comes to reupholstering work, Massachusetts considers this type of work to be "fabrication" as opposed to just a general service. Fabrication is subject to Massachusetts sales tax. Here is what the Massachusetts regulation says about reupholstering:

      [Reupholsterers. The reupholstering of furniture, including the making of a new slipcover, is a fabrication. A fabrication is subject to the sales tax. The reupholsterer shall collect the sales tax from the customer. The tax applies to the total amount which the reupholsterer charges the customer, whether or not the reupholsterer states the material charge and labor charge separately in the bill. This is also true if the customer furnishes the material. Where a reupholstering business performs a job which involves essentially a mechanical or structural repair, the transaction is a repair and is taxable as a repair, not as a fabrication.]

      So although one might think that reupholstering is the same as providing a non-taxable service, Massachusetts says that any change in the form or substance of tangible personal property, or any substantial alteration in the form or shape of an existing article of tangible personal property where either party to the transaction furnishes the material, is a fabrication and that fabrication is a sale that is subject to the sales tax.

      Hope this helps.
      Sylvia

  • Posted by Nat on May 30, 2016 8:13am:

    Hi Silvia,

    Our company that has nexus in MA, buy Cloud Services. Should we pay use tax if vendor show in the bill - tax 0%?

  • Posted by Nat on May 30, 2016 7:50am:

    Hi Silvia,

    Should our company pay use tax in MA from cloud services?
    We have nexus in MA

  • Posted by Erin on May 25, 2016 3:40pm:

    Very well worded. I've done a lot of research since my company was Audited for Use Tax (a year or so before I started working). I was told to add use tax to all materials that that do not show it, less shipping costs. Where is gets grey is the 'manufacturer' and product rules.
    Since it is a grey area, I wanted to get your opinion on OUR 'product'. We are general contractors that produce custom homes for our clients. Is there any way we would be a tax exempt vendor since we are using goods towards a bigger product? Or are we strictly service providers?
    Also, we use many subcontractors and the tax can fall in a grey area. Example: I get a bill from a vendor that is out of state and builds doors and delivers the finished product. This includes 'manufacturing' labor and materials bought out of state and delivers to our site in MA. I usually add use tax to the entire bill. Should the labor be separated and materials only taxed? Thoughts?
    Another question is the definition, in your opinion, of an 'occasional' purchaser vs. a registered vendor. It's part of the Amazon query that is so complicated - we purchased materials online as needed, and most often use them to build our clients houses, sometimes for office use, etc. Are we a vendor (monthly deposits) according to MA or an occasional user (annual form st10)?

  • Posted by Jeff on May 11, 2016 3:32pm:

    Hi Silvia,
    It seems I might be getting charged for delivery of new washer from Sears and also haul away of old one. They say stuff like - oh it is just in the system so we have to charge it and can not give it back to you in any way. This appears wrong, illegal and a big money grab for Sears. As you have said, there is no tax on services in MA, so can you clarify this and without spending hours and hours, how can I get my money back? Thank you! Jeff

  • Posted by Marcia on April 28, 2016 7:52am:

    Hello,

    I see conflicting information on pre-written software and custom software. http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h13-computer-industry-services-and.html
    This rule from 2006 shows pre-written as taxable and custom as non-taxable, but what about this FAQ statement from 2013 showing that custom software is taxable... which one is correct? Should they both be taxable?http://www.mass.gov/dor/docs/dor/law-changes/faqss-computer-software-2013.pdf

    • Posted by Author photo of Sylvia F. Dionsylviadion on May 9, 2016 7:14pm:

      Marcia,
      Thank you for reading my post and your question/comment.

      In 2013, Massachusetts passed legislation which made custom software taxable (subject to sales tax). The FAQ you read was one of several documents Massachusetts issued in 2013 to explain the law change. HOWEVER, the law was so controversial that it was repealed less than two months after it went into effect. You can read more about this development here: http://www.sylviadioncpa.com/IPT_Tax_Report_Nov_2013_Article_The_Massachusetts_Tech-Tax__Fiasco.pdf

      So currently, only pre-written software is taxable. Custom software is not taxable.

      Hope this helps.

      Sylvia

  • Posted by Bonnie on April 21, 2016 7:52am:

    Why does Boston Market charge 7% sales tax for food purchases.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on April 23, 2016 8:46pm:

      Bonnie,
      Thanks for the comment. You may have noticed my statement in my post above (in the first bullet), where I mentioned "however local jurisdictions do have the option of imposing a local option meals tax." Massachusetts permits cities and towns to impose a local sales tax of .75% on the sale of restaurant meals originating with the city or town. This local excise, which is imposed in addition to the 6.25% state sales tax, means the total tax rate on meals will be 7% if you purchase the meal in a city or town that imposes the additional .75% local option meals tax. This is why you've been charged 7% on by Boston Market. Thanks again.

  • Posted by Laurinda on April 15, 2016 10:08am:

    Hi Sylvia,
    I just found your blog, & am hoping you respond to the post by Lauren on October 12, 2015 6:55pm, as I have the exact same question!

    • Posted by Author photo of Sylvia F. DionSylvia Dion on April 24, 2016 1:37pm:

      Laurinda,
      Thanks for your comment. I have posted a reply to the question you mentioned you also have a question about. See my response to Lauren below. I hope this is helpful. Any other questions, please let me know.

  • Posted by E.Beck on April 12, 2016 8:26am:

    My company does analysis on data scraped from the web and then delivers reports on that data via email to customers located in MA. The customers sign up to receive those data reports via monthly subscriptions. Should I be charging my customers MA sales tax?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on April 24, 2016 12:48pm:

      E. Beck,
      Thank you for reading my post and your comment/question. In order for your company to have a Massachusetts sales tax collection duty, your company would have to have "nexus" to Massachusetts - which in general, means a presence in Massachusetts such as an office, employees, contractors, etc. (note: a physical presence can be triggered in many more ways than just these few examples). If your company does not have nexus to Massachusetts, then there is no need to charge or collect Massachusetts sales tax.

      But if your company does have nexus to Massachusetts, then whether what you provide to your customers would be taxable would depend on whether you are considered to be providing a "report of individual information" (generally taxable) or a "report of standard information" (generally not taxable). I suggest taking a look at the Massachusetts Computer Industry Services and Products Regulation, 830 CMR 64H.1.3: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h13-computer-industry-services-and.html - specifically Section (2), where these two types of reports are defined, and Section (8) which addresses the taxability of furnishing information to customers. Another place where you might find helpful information is in the Letter Rulings section - here you may find issued rulings in which the Massachusetts DOR has addressed a product similar to what you are providing. http://www.mass.gov/dor/businesses/help-and-resources/legal-library/letter-rulings/letter-rulings-all.html

      Hope this help.

      • Posted by E.Beck on April 25, 2016 11:49am:

        First of all - Thank you so much for the reply, Sylvia. This is extremely helpful!

        We do have nexus in MA, and after reading the sources you posted, I believe the reports we provide are considered "standard reports" because we offer them for any customer who subscribes to our service.

        However, I'm still having a little bit of trouble interpreting this:

        "Sales of reports or other information on printed matter or magnetic media, sold or intended to be sold to two or more purchasers, are generally taxable."

        The reports we provide do fall into the definition of "standard reports" but they are provided via email only and never through any printed or tangible media.

        Am I correct to conclude that we do NOT have to charge sales tax because we do NOT provide a tangible report or a report through any magnetic media?

        Thank you!

        • Posted by Author photo of Sylvia F. Dionsylviadion on May 9, 2016 6:46pm:

          E. Beck,
          Thanks for the follow up comment/question.

          Because the Massachusetts DOR tends to take an aggressive approach in its interpretation, I would suggest contacting the Massachusetts Rules & Regulations Bureau with your question. You can email them directly at: RulesandRegs@dor.state.ma.us. If you have a general question, they should send you back a General Information Letter (via email) - which may contain enough information to help you come to the conclusion you need. You may also want to look through the Private Letter Rulings section of the DOR website. The DOR may have issued guidance to another taxpayer with similar facts in the past. http://www.mass.gov/dor/businesses/help-and-resources/legal-library/letter-rulings/

          Hope this helps.
          Sylvia

          • Posted by E.Beck on May 10, 2016 7:31am:

            Thank you Sylvia!! Very helpful!

  • Posted by Rob on March 21, 2016 11:09am:

    I will be running a self-serve roadside nursery stand in front of my home. Am I obligated to collect sales tax on the sale of non-food producing plants even though I have no direct contact with the customer? If yes, how do I do that since I am not writing up any sales receipts?

    • Posted by Author photo of Sylvia F. DionSylvia Dion on March 22, 2016 7:54pm:

      Rob,

      Thanks for your question/comment. First, are you in the nursery business? Or are you just someone for whom gardening is a hobby and happens to be selling plants via self-serve in front of your home (as you mentioned).

      If the nursery stand is your actual business, then you are making sales of a taxable product in the course of your trade/business. And even if you do not collect the sales tax on these sales, you're "technically" required to pay the sales tax to the Massachusetts DOR (you would essentially be paying the sales tax "out-of-pocket" if you do not collect it from the customers). Even if you do not write up a sale receipt, the self-serve sales would need to be reported on your Massachusetts sales tax return as part of your taxable sales.

      If you are someone who is gardening as a hobby and happens to be selling the plants, then you would not be required to pay Massachusetts sales tax on these casual plant sales.

      • Posted by Rob on March 23, 2016 1:18am:

        Thanks Sylvia for the quick reply! This is the answer I expected. You have saved me much time as the MASS DOR website was entirely unhelpful, and who knows how many phone calls it would have taken to get the same information!

        Yes this is a new business. What I will then do is essentially build the sales tax in to the price of the items; then figure out the tax liability as a percentage of receipts. It will get a bit more complicated when I also sell non-taxable vegetable and herb plants. And of course there is also the hidden variable of shrinkage (a nice term for theft) to consider.

        • Posted by Author photo of Sylvia F. DionSylvia Dion on March 23, 2016 8:48pm:

          Rob, You're welcome! There's been a lot of changes to the Mass DOR website in the last year or so and I find it's become more difficult to find information (not a fan of all the changes). You're approach sounds good. Good luck with the plant selling.

  • Posted by Daria on February 27, 2016 1:58pm:

    Hi,

    I'm a new business owner. Do we have to collect sales taxes on Commercial pest control services in MA. If we do - where do i pay it and how often?

    Thank you in advance.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on March 22, 2016 7:40pm:

      Daria,
      Thank you for your comment/question. Pest control services are not a taxable service in Massachusetts. However, if you sell actual pest control products to you customers - those would be taxable.

  • Posted by SEG on February 26, 2016 9:49am:

    Love your blog! Wondering if you can help with this question...

    I'm having a catered affair where the catering company is supplying food and some waiters at my venue. The food, equipment rental, and labor are all priced separately. I realize I should expect to pay MA sales tax on the food and rentals, but thought the labor should NOT incur MA sales tax. Is that correct?

    Thanks for providing this excellent service.

    SEG

  • Posted by Larry on January 6, 2016 11:07am:

    Hello,
    I am an antique dealer. I live in MA, I where house my inventory in CT. I sell online only. Do I collect sales tax to customers who purchase from me online when the items are shipped out of state? I have heard no, and recently yes. I need to know so I can get this correct.
    Thank you

    • Posted by Author photo of Sylvia F. Dionsylviadion on January 23, 2016 9:01pm:

      Larry,
      Thank you for reading my post and your comment. It sounds as if your inventory is located in Connecticut (not in Massachusetts) and since you have posted this question here at the Massachusetts blog, I assume when you ask whether you must charge your customers sales tax on items shipped out of state you are wondering whether Massachusetts sales tax should be charged. While you do have nexus in Massachusetts, if the customers are located out of state and your items are shipped from a Connecticut warehouse to the out of state location, there would be no requirement to charge Massachusetts sales tax. The Massachusetts Regulation on Out-of-State Deliveries is very comprehensive and explains how the Massachusetts law applies in various situations where deliveries are made to customers out of state. Here is link to the Regulation: http://www.mass.gov/dor/businesses/help-and-resources/legal-library/regulations/64h-00-sales-and-use-tax/830-cmr-64h67-out-of-state-sales-and-deliveries.html I hope this helps. Thanks again for the comment.

  • Posted by Les on December 16, 2015 5:28pm:

    Dear Silvia,
    We are a small SAAS company located in PA but have employees working from their homes who help customers implement our services. We our thinking about hiring an employee who lives in MA to help customers implement our service. Does this arrangement create nexus in MA for us?
    Thanks for your reply.
    SIncerely,
    Les

    • Posted by Author photo of Sylvia F. Dionsylviadion on December 16, 2015 6:05pm:

      Les,
      Hello and thank you for reading my post. To answer to question - yes, hiring a Massachusetts resident/employee who will work with your Massachusetts customers and who will implement your company's service in the state will create nexus in Massachusetts for sales tax and also, quite possibly for the Massachusetts corporate tax purposes. Also, if your SaaS product is a canned (not custom) software, then there's also a good possibility that your SaaS product will be subject to Massachusetts sales tax. (Massachusetts taxes canned software regardless of method of delivery and including hosted software).

      Hope this helps.

      • Posted by Les on December 16, 2015 6:16pm:

        Thanks Sylvia for your quick response.

  • Posted by Jane on October 30, 2015 7:32am:

    Very interesting post. I live in MA and am selling a book through Ingram (i.e. I just upload the files and they print the book, somewhere, and ship it to customers worldwide.). Do I have to pay MA sales tax? Nothing is physically located in MA - not the printers, and in all probability not even the customers.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on April 24, 2016 1:00pm:

      Jane,
      Thank you for reading my post and your question/comment (and apologies for the delay in the response). You mention that you are based in Massachusetts and are the seller of a book (which is printed and shipped by Ingram to customers everywhere). Assuming you have no activity in any other states (no employees, offices), then the ONLY state where you would have to charge sales tax is Massachusetts - your home state. Even though Ingram is printing and shipping your books from elsewhere, you have nexus in Massachusetts (because you are resident in Massachusetts). Therefore, books that are shipped to customers in Massachusetts would need to have Massachusetts sales tax added.

      Hope this helps. Any other questions, please let me know.

  • Posted by Lauren on October 12, 2015 6:55pm:

    I I am confused about selling handcrafts and charging sales tax on the entire amount. I have paid tax on all of my supplies, so am I also having to pay sales tax on my labor? If I have to pay income tax so that seems that my work is being taxed twice.

    • Posted by Author photo of Sylvia F. DionSylvia Dion on April 24, 2016 1:32pm:

      Lauren,
      Thank you for your comment/question (and my apologies for the delay in responding - I was notified by another reader that you had posted a similar question to hers, so I wanted to make sure I addressed your question and hers).

      First, let's focus on the sales tax piece of your question. When you purchase materials and supplies that are incorporated into your handcrafts - those items can be purchased sales tax-free by providing your supplier a Massachusetts Exempt Use Certificate (Form ST-12), and noting on line 1. of the ST-12 that the materials will become an ingredient or component part of tangible personal property to be sold. http://www.mass.gov/dor/docs/dor/forms/wage-rpt/pdfs/st-12.pdf

      You must be a Massachusetts registered vendor to be able to provide the ST-12 to your supplier (you mentioned you collect Massachusetts sales tax so I assume you are registered). You are correct to charge Massachusetts sales tax on the finished handcrafts, but the materials and supplies you purchase to create that handcraft are exempt - thus, you eliminate sales tax being charged twice. Also, unless you are segregating labor on your invoice to the customer, then the entire price you charge the customer is subject to sales tax.

      Now onto your second question, keep in mind that sales tax on the sale of your handcraft is charged TO the customer - you are simply collecting the sales tax that belongs to Massachusetts and paying it to Massachusetts. (As I explain above your supplies purchases are exempt if you provide an ST-12). The income tax is imposed on your net taxable income from your business of selling handcrafts. So your work isn't being taxed twice. The sales tax charged on the handcrafts is paid by your customer, the net taxable income (net profit) from you handcraft business is paid by you. Yes, you may have OTHER purchases that you make for your business that are subject to sales tax - such as purchases of general office supplies. Here you will pay the sales tax (and can't buy these tax-free). So as a business owner you are subject to both sales tax (a tax on your consumption) and income tax (a tax on your profit).

      I hope this helps. Let me know if you have any questions.
      Sylvia

  • Posted by Do on May 22, 2015 12:21pm:

    […] the Internet Sales Tax blogger for SalesTaxSupport’s Issues, Insights and Ideas blog and the Massachusetts Sales Tax blogger for SalesTaxSupport’s State blog. She is also fluent in Spanish, and because she has […]

  • Posted by Massachusetts on March 25, 2015 11:49am:

    […] to accept the SST Exemption Certificate.  However, as I mentioned in my last Massachusetts post, Massachusetts is not a Streamlined Sales Tax member state so the SST Exemption Certificate cannot […]

  • Posted by P on March 5, 2015 6:24pm:

    Hi Sylvia
    We are incorporated in DE and registered as foreign corp in Mass and operate out of Mass. We buy credit card terminals, load them with our prewritten software or then customized software and then ship it for use in the store by the merchant. Then we charge the merchant Saas per month fees and one time cost of the credit card machine. Couple of questions:1) if merchant is in state, do we collect sales tax for the credit card machine from merchant and if out of state? do we have to pay sales tax when we buy the credit card machine?
    2) Sometimes the stores are a part of a retail chain and we donot deal with individual stores but deal with corporate office, in such case when we sell the machine + software should we be collecting sales tax, in state and out state?

  • Posted by Eve on January 26, 2015 5:11am:

    If a customer provides us with a "blanket" ST-4 or ST-12 form, is that good forever or do I have to collect a new one every 3 years as I was told when I started this job?

    • Posted by Sylvia on February 7, 2015 8:53pm:

      Eve,
      Thank you for your question/comment. In Massachusetts the statutory renewal period is 10 years. You can find this in the Massachusetts statute at Massachusetts G.L. c. 64H §6(e). You can also find this in Massachusetts Administrative Procedure (AP) 101.1.5, Exemptions from Sales Tax - Renewal Requirements. http://www.mass.gov/dor/businesses/help-and-resources/legal-library/administrative-procedures/ap-101-exemptions-from-sales-tax.html I hope this helps. If you other questions, please feel free to let me know.

  • Posted by International on January 7, 2015 5:00pm:

    […] the Internet Sales Tax blogger for SalesTaxSupport’s Issues, Insights and Ideas blog and the Massachusetts Sales Tax blogger for SalesTaxSupport’s State blog. She is also fluent in Spanish, and because she has […]

  • Posted by Carl on December 28, 2014 4:06am:

    I have reached a time in my life where I need to reduce my gear that I have accumulated over many years. If I go to sportsman's show and sell my new and or used fishing gear that I bought or made do I need to charge a sales tax and also pay a sales tax when I sign up as a vendor at one of these local shows?

    • Posted by Sylvia on February 7, 2015 9:29pm:

      Carl,
      In general if you're participating in a trade show you're required to register as a transient vendor and collect and remit sales tax on sales of items that subject to Massachusetts sales tax. Incidentally, Massachusetts also requires promoters of "any flea market, either indoor or outdoor, craft show, antique show, coin show, stamp show, comic book show, fair and any similar show, whether held regularly or of a temporary nature and at which more than one vendor displays for sale or sells tangible personal property subject to tax" to register as a promoter and file a report which provides that Massachusetts DOR with each participating vendor's name, address and Massachusetts sales tax number.

  • Posted by Carlos on November 6, 2014 6:15pm:

    Hi Silvia ,
    Might be you kindly answer a question as i am confussed about sales tax colleting obligation by internet seller. I am an foreing internet seller based on Spain, I'll trade with USAcustomers throght sales webpages to sell and transfer of the right to use software installed on a remote server out of USA. I have not a "PE" I just intent to trade throught internet, do i collect sales taxes any way and in this case should I register my company in all states in order to sales broadly in US?
    Best Regards, Carlos

    • Posted by Larry on May 5, 2017 12:12pm:

      As I understand it in the state of Massachusetts if you do not have a physical presence in the state the purchase is considered out of state and is not taxed.
      I believe this holds true for most states that charge sales tax.

Submit a comment or question - only your first name will appear

Disclaimer:

Access to any portion of SalesTaxSupport.com is contingent upon your acceptance of our Terms of Use. This Web Site and content provided by STS Publishing, LLC and its third party content providers, including, but not limited to information, documents, forms, comments, advice and opinions, is for informational purposes only, and is not a substitute for professional advice, nor does the use of this Web Site constitute a professional-client relationship. The Web-Site also includes advertisements, directory listings, job postings and links to third party web sites, all of which are provided for your convenience only and in no way constitute a referral, endorsement, or warranty by SalesTaxSupport.com of any product or service provided by such third parties. All content is provided “as is” with no guarantee regarding accuracy, suitability, or timeliness. Your reliance on any content accessed on or through the Web Site, or on any product or service provider is strictly at your own risk.