If you’re starting a business in Massachusetts and plan to sell products or offer certain services, you’ll need to get a Massachusetts sales tax permit. This permit might also be called a seller’s permit, sales tax license, or sales tax number.
Keep reading this guide to learn about who needs a sales tax permit, what kinds of products and services are taxable, how to sign up for one, and what you need to do for reporting.
Related: Massachusetts Startup Checklist
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, general 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
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, it charges the customer the appropriate sales tax rate. The business collects this tax and sends it to the Massachusetts Department of Revenue.
How much sales tax is charged in Massachusetts?
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 Massachusetts Department of Revenue will determine a filing frequency based on the expected sales volume, 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 is the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which 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.
Massachusetts Sales Tax Permit FAQs
Who needs a Massachusetts sales tax permit?
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, it is selling, renting, or leasing property in Massachusetts
– Gets parts to manufacture goods for sale or resale in the state
– Hires Massachusetts employees (including remote employees, sales representatives, or agents)
– An online business located in Massachusetts is selling taxable products to Massachusetts residents
– A remote seller shipping over $100,000 of tangible personal property to Massachusetts residents
What products and services are taxable in Massachusetts?
Physical Products: 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 (except food sold at a restaurant, which is tax-exempt), certain clothing, prescriptions, medical equipment, and manufacturing equipment are also tax-exempt.
Digital Products: Digital products are tax-exempt in Massachusetts.
Services: 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 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?
Applying online for a temporary Massachusetts sales tax permit can take up to 48 hours. Typically, 7-10 business days after registering, a Sales and Use Tax Registration Certificate (Form ST-1) will be sent. This certificate must be displayed at each business location where customers can easily see it.
Do you have to renew a 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, needs to be updated by the Massachusetts Department of Revenue.
Is a business license the same thing as a sales tax license?
No – A business license and a sales tax permit serve distinct purposes.
A business license authorizes the operation of a business within a particular jurisdiction, ensuring compliance with local laws and regulations. On the other hand, a sales tax permit enables a business to legally collect sales tax from customers, which is then remitted to the state government. Typically, businesses require a license and a permit to operate fully within the law.
How do I get a wholesale license in Massachusetts?
A business can 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 wholesale license, seller’s permit, or sales tax exemption certificate) to document the items purchased for resale.
If you have questions about the sales tax permit, the Massachusetts Department of Revenue has a guide to sales and use taxes in Massachusetts. You can also contact them at 617-887-6367 or 800-392-6089.
