Sales and Use Taxes in Massachusetts

April 13, 2006

	Visited: 104
	Not rated
	Rate:

In Massachusetts the sales tax is imposed upon gross receipts from sales at retail, including meals, leases and rentals, by vendors. The tax is collected from the purchaser but is imposed on the vendor.

Sales and use tax rate. The Massachusetts sales and use tax rate is generally 5 percent on the state level.

Tax exempt items. Massachusetts includes many specific items that are exempt from sales tax — for example, certain prescription medications and food for human consumption are exempt. You'll want to check to see if you are exempt from the tax.

Responsibility for paying sales tax. Although the sales tax is imposed on a vendor's gross receipts, and the vendor is responsible for remitting the sales tax to the state, the vendor must add the tax to the sales price charged the purchaser. The tax constitutes a debt from the purchaser to the vendor and is recoverable at law in the same manner as other debts.

Use tax. Use tax is a tax on the storage, use, or consumption of tangible personal property, including transfers of possession by lease or rental, in the state. Use tax does not apply when the state's sales tax was paid.

Responsibility for collecting use tax. The liability for the use tax is imposed on the person storing, using, or otherwise consuming a taxable property or service in the state. However, if the property or service is purchased from a vendor engaged in business in the state, the vendor is responsible for collecting the use tax from the purchaser and remitting the tax to the state.

Obtaining tax permits in Massachusetts. If you are a vendor doing business within the state you must obtain a registration for each place of business. Certificates of registration are issued by the Commissioner upon applications submitted by vendors. Currently no fee is required when obtaining a sales tax permit. Certificates may be issued for specified terms of not less than three years.

Leases. Leases are subject to sales and use tax at the same rate as if the item is sold. The rental or lease of tangible personal property is subject to tax because rentals and leases are included in the definition of "sale."

The following discussions address additional sales and use tax issues that many small business owners face: