Massachusetts: Sales Tax Handbook
What constitutes sales tax nexus in Massachusetts?
One of the more complicated aspects of Massachusetts sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Massachusetts, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Massachusetts, the vendor must register for a Massachusetts sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Massachusetts.
Sales Tax Nexus in Massachusetts
According to the Massachusetts law, retailers who have tax nexus must be vendors who are "engaged in business" in the commonwealth. This can be defined in several different ways. If your business keeps goods in a warehouse within the state, has an office, any place of business, or any owned property in the state, there is delivery of property or performance of a service in Massachusetts, has a sample or display area(such as a trade show or craft fair) within the state's boundaries, owns a real or personal property in Massachusetts, or an employee who is present in the commonwealth for greater than two days each year has tax nexus in the state of Massachusetts.
For additional details on sales tax nexus law in Massachusetts, see the nexus information page from the Department of Revenue at http://www.mass.gov/dor/individuals/taxpayer-help-and-resources/tax-guides/salesuse-tax-guide.html
Taxation of Internet-Based Sales in Massachusetts
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Depending on the situation, Massachusetts may or may not charge sales tax on Internet-based transactions. Massachusettes's statute does indicate that it is possible for tax nexus to exist. However, in the case Quill Corp. v. North Dakota, the U.S. Supreme Court declared that due to the Commerce Clause, a seller must have a physical presence in the state of Massachusettes for the state to legally require the seller to collect sales tax
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Massachusetts, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Massachusetts?
The folks at the sales tax compliance company Avalara are an approved Massachusetts sales tax partner, and you can use their free Massachusetts nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Massachusetts sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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