Most businesses starting in Massachusetts that are selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.
Check out the rest of this guide to find out who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.
Who needs a sales tax permit in Massachusetts?
A business must register as a vendor in Massachusetts when:
- A business has sales tax nexus. Nexus means having a physical presence in the state such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- In most cases is selling, renting or leasing in Massachusetts
- Gets parts to manufacture goods for sale or resale in the state
- Employees (including sales representatives or agents) are working in Massachusetts
- An online business located in Massachusetts is selling taxable products to Massachusetts residents
- A remote seller shipping over $100,000 in tangible personal property to Massachusetts residents;
What products and services are taxable in Massachusetts?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Massachusetts. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Food for consumption (with the exception of food sold at a restaurant is tax-exempt) in addition to certain clothing, prescriptions, medical equipment and manufacturing equipment is tax-exempt.
Labor in most cases isn’t taxable in Massachusetts. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products are tax exempt in Massachusetts.
Most services aren’t taxable in Massachusetts, however there are a few exceptions such as certain telecommunications services.
More information about taxable services in Massachusetts is available from the DOR.
How to register for a sales tax permit in Massachusetts
A sales tax permit can be obtained by registering through MassTax Connect.
Information needed to register includes:
- Business name
- Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
- Names and addresses of owners/officers/members
- Description of what products or services are being sold
- Business address
- Phone number
- Employer Identification Number (EIN) from the IRS, or owner’s Social Security Number if a sole proprietorship with no employees
- Date business activities began or will begin
- Projected monthly sales
How much does a sales tax permit cost in Massachusetts?
There is no cost for a sales tax permit in the state of Massachusetts.
How long does it take to get a Massachusetts sales tax permit?
Expect up to 48 hours when applying online to get a temporary sales tax permit. Typically, 7-10 business days after registering, a Sales and Use Tax Registration Certificate (Form ST-1) will be sent. This certificate needs to be displayed at each business location where customers can easily see it.
Do you have to renew your Massachusetts sales tax permit?
The sales tax permit is a one-time registration and no renewals are needed. Be mindful that if any information about the business changes such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Massachusetts Department of Revenue.
How much sales tax is charged?
Massachusetts has a flat 6.25% sales tax rate on the sales price or rental charge on tangible personal property.
When are Massachusetts sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected volume of sales, which will be monthly, quarterly or annually. Generally, a business collecting over $1,200 in sales and use tax each month will file monthly.
The due date for filings are the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number, and a completed Massachusetts Resale Certificate – Form ST-4) (also referred to as a sales tax exemption certificate) to document the items being purchased are for resale.
In addition to registering for a sales tax permit, there may be other business licenses needed before starting a business in Massachusetts. Learn what business licenses are needed in Massachusetts.
If you have questions about the sales tax permit, the Massachusetts Department of Revenue has a guide to sales and use taxes in Massachusetts or can be contacted by calling 617-887-6367 or 800-392-6089.