“The statewide sales tax for businesses in Massachusetts is 6.25%”

What Does The Sales Tax For Businesses In Massachusetts Mean?

The sales tax in Massachusetts refers to the tax imposed by the government on the purchase of most tangible personal items covering certain telecommunication services that are successfully sold or rented. Businesses situated in Massachusetts are required to collect taxes i.e. 6.25% sales tax from consumers. 

The sales tax collected from customers belongs to the state of Massachusetts, not by sellers. It is the responsibility of sellers to manage the taxes collected to remain in compliance with state and local laws.

Read More: Missouri Sales Tax For Businesses: A Complete Guide

How Much Is The Sales Tax For Businesses In Massachusetts?

Sales Tax For Businesses In Massachusetts is 6.25% for both sales price and rental charge on tangible personal property that includes certain telecommunication services that are sold or rented in the state. The seller is completely responsible for collecting the tax from the seller. 

Massachusetts Sales Tax Threshold Limit
6.25%$100,000 in annual sales

Do You Need To Collect Massachusetts Sales Tax For Your Ecommerce Business?

If you have nexus in Massachusetts, then it is essential to collect the sales tax for your eCommerce business. And when it comes to nexus, sellers can be linked to a state in mainly two ways: one is physically or the other is economical. Let’s understand the difference between both – Physical nexus refers to having sufficient tangible presence or activity in a state to give the justification of paying sales tax there. Whereas, economic nexus means passing an economic threshold for total revenue and the total transactions that take place in that state. 

What Types Of Goods and Services Are Taxable Under Massachusetts Sales Tax?

Sales tax applies to several goods and services in Massachusetts. Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in Massachusetts. Whereas, prescription drugs, groceries, gasoline, and clothing are all tax-free purchases. 

Taxes on Transactions

Sales tax is legally required to be collected for tangible, physical things sold to a consumer in the state of Massachusetts. Mostly the food and grocery products (not considering restaurant food here), sanitation and health care items, garments, and medical equipment that have been prescribed are all exempt from this tax.

This means that while someone selling textbooks and school supplies would be compelled to charge sales tax, someone selling coffee and hot chocolate would not be required to do so on the majority of their items.

Taxes on Services

In the state of Massachusetts, the tax is imposed on certain goods and services. While most of the services are not liable to taxes, there are a few exceptions. Let’s discuss this with an example – a service whose work includes creating or manufacturing a product is likely considered to be taxable, and thus you would most likely have to pay sales tax on the service.

Home Appliances 6.25%
Motor Vehicles6.25%

Tax Collection

Once you are successfully registered to collect sales tax in Massachusetts, you need to file timely returns with Massachusetts DOR and keep excellent records. The state only relies on a statewide tax rate i.e 6.25%.  

That means sellers can charge the state sales tax rate of 6.25% to buyers. Whether your business is inside Massachusetts or in another state, you need to collect taxes based on that.

Tax Filing

If your business is registered with the Massachusetts Department of Revenue, you’ve to collect sales tax. But remember, these taxes don’t belong to the seller and have to be transferred to the tax authorities. Once you collected the sales tax, you have to further submit them to Massachusetts DOR by a certain date. The DOR will further distribute them accordingly. 

Tax filing in Massachusetts is a two-step process – (1) submitting the required sales data and (2) remitting the taxes to DOR. The filling process also forces the seller to detail the total sales, the total tax amount collected, and the location of each sale. The filing is for all newly registered businesses and existing ones. 

How Often Do You Need To File Massachusetts Sales Tax Return?

There are some due dates associated with the filing frequency allotted to business by Massachusetts DOR. By having filing information in mind, you can easily prepare and can plan accordingly. But make sure to file taxes timely as a failure can lead to late fines and interest charges. In short, Massachusetts DOR requires all sales tax to be filled or completed by every 20th of the month. 

What If You Fail To File Your Tax Return Before The Due Date?

As soon as you pay all the taxes, it is good for you. If you mistakenly missed filing sales tax or failed to fulfil the deadline, there are some penalties or interest charges you have to pay. The more you wait to file, the penalties might be greater. 

How FreeCashFlow Can Assist You With Massachusetts Sales Tax 2022?

Freecashflow.io provides the best assistance to eCommerce businesses in accounting and tax. We’ve worked with Warner Brothers, Ernst & Young, and Paramount Pictures, among other multibillion-dollar organisations. We can assist you with tax and accounting concerns. If you have any questions, please do not hesitate to contact us.

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