Sales Tax Obligations of Sellers in Massachusetts

April 13, 2006

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Massachusetts imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. A resale certificate relieves you, the seller, of the burden of proving that a sale is not taxable only if you accept the certificate in good faith. The purchaser must be a registered vendor engaged in the business of selling the type of property being purchased and who intends to sell the property in a sale at retail in the regular course of business. The seller is also relieved if the purchaser, who is a registered vendor, is unable to ascertain at the time of purchase whether the property will be sold or will be used for some other purpose.

Procedure for accepting blanket certificates. Certificate holders regularly engaged in making tax-exempt purchases may furnish a certificate to the seller specifying that all tangible personal property subsequently purchased will be for the purpose shown on the certificate. This blanket certificate will relieve the burden of executing a separate certificate for each individual tax-exempt purchase as long as there is no significant change in the operations. A blanket certificate describes the general nature of the property purchased for resale. Massachusetts does not have a prescribed form that needs to be completed for a blanket certificate.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Massachusetts has a statute that taxes all sales, without an exemption for out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have a physical presence within Massachusetts. To determine if you have physical presence, ask yourself the following:

Do I have retail facilities, a warehouse or any office space in Massachusetts? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
Do my employees or I enter Massachusetts for purposes of taking and transmitting orders from Massachusetts? If your employee or independent contractor goes into Massachusetts to take or transmit orders your business may have physical presence in Massachusetts. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
Do my delivery vehicles frequently enter Massachusetts for purposes of delivering property? Frequent deliveries in Massachusetts by your trucks will give you physical presence in Massachusetts.

Sales tax "bracket system." The following bracket system may be followed by you as a seller in computing the sales tax due upon a particular sale. In addition to a tax of five cents on each full dollar, a tax is collected on each part of a dollar in accordance with the formula below.

Amount of Sale	Amount of Tax
$0.01 to $0.09 inclusive	No tax
0.10 to 0.29 inclusive	0.01
0.30 to 0.49 inclusive	0.02
0.50 to 0.69 inclusive	0.03
0.70 to 0.89 inclusive	0.04
0.90 to 1.09 inclusive	0.05

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. As a vendor you will be subject to criminal penalties if you advertise or hold out to the public that the sales or use tax:

will be assumed or absorbed by the vendor
will not be added to the sales price of the property or services sold, or
will be refunded if it is added to the sales price

Claiming refund for excess tax payments. As a vendor you may apply in writing for a refund of sales tax. However, a sales or use tax will not be refunded to a vendor requesting abatement until the vendor establishes that the tax was repaid or credited to the purchaser.