Massachusetts Sales Tax Guide
Chapter 5: Filing and paying Massachusetts sales tax
You're registered with the Massachusetts Department of Revenue and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Massachusetts, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Massachusetts sales tax returns impacts your business.What does it mean to file an Massachusetts sales tax return?
Technically speaking, filing Massachusetts sales tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Massachusetts sales tax filing form and mail it to the Massachusetts Department of Revenue or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of sales tax they have collected, and from where. The Massachusetts Department of Revenue wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Massachusetts sales tax returns, they stay abreast of your growing company.When am I required to file my sales tax return?
The Massachusetts Department of Revenue will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Massachusetts filing due dates page for more information.Am I required to file and pay my Massachusetts sales tax at the same time?
Massachusetts sales tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Massachusetts sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Massachusetts sales tax returns. Users can sign up and use the service to prepare Massachusetts returns free for 30-days.
Filers may also file directly with the Massachusetts Department of Revenue by visiting their site and entering your transaction data manually. This is a free service, but preparing Massachusetts sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my sales tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their sales tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Massachusetts sales tax code.What happens if I file or pay my sales tax return late?
The Massachusetts Department of Revenue imposes the following sales tax penalties on businesses who fail to file or pay sales tax according to government policy:
- Late Payment Penalty: The penalty for a late payment of collected sales tax is equal to 1% of the unpaid tax filed on the return per month (or fraction thereof). There is a set maximum of 25%.
- Failure to File Penalty: The penalty for failing to file a return by the due date is 1% of the balance due per month (or fraction thereof). There is a set maximum of 25%.
- Interest on Unpaid Taxes: Interest is charged on any outstanding, unremitted sales tax based on the federal short-term rate (which can change quarterly) plus four percentage points, compounded daily.
Yes! Once you've successfully registered for and been issued a Sales and Use Tax Registration Certificate, you are required to file at the completion of each assigned collection period regardless of whether any sales tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Massachusetts Department of Revenue so don't take this responsibility lightly.If I close my business, do I need to file a final sales tax return?
Yes! The Massachusetts Department of Revenue requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Massachusetts Department of Revenue offer a discount for filing on time?
At this time, the Massachusetts Department of Revenue does not offer sales tax filers a vendor discount.