Should you be paying use tax?

14 Pages·1991·0.49 MB·English

by  Massachusetts. Department of Revenue

—
WhatIsthe TheMassachusettsusetax im-
Massachusetts plementedin 1966togetherwiththe
—
Use Tax? Commonwealth'ssalestax applies
topurchasesmadeoutsideMass-
achusettsthatareused, consumedor
storedinthe Commonwealth. Unlike
salestaxwhichiscollectedbythe
merchantfrom whomyoumakeyour
purchase, usetax, inmostcases, is
paidbyyoudirectlytothestate. The
usetaxisleviedatthesame5percent
rateandonthesamepurchasesasthe
Massachusettssalestax.
WhoShould Bothindividualsandbusinessesarere-
payUse Tax? quiredtopayusetaxwhenmaking
out-of-statepurchasesthataresubject
tousetax.
MustIPayUse Ifyou make a purchase in another
— —
TaxonAll state or another country that
Out-of-State ^^^^^ subject to Massachusetts
Purchases? sales tax ifpurchased in the Com-
monwealth, and pay no sales tax or
pay a sales tax rate less than the 5
percent Massachusetts rate, then
you are responsible forpaying a use
tax to the Commonwealth on that
purchase. This applies to purchases
that are used, consumed or stored
in Massachusetts and includes items
that are rented or leased.
IMakeOccasion- Ifyou are an individual making a
alOut-of-state purchase forpersonal use, and not
Purchasesfor for business use, you must submit
PersonalUse. Form ST-10/11 for any year in which
you make such purchases. ST-10/11
HowDoIPay is due, with payment in full, on or
Use Tax?
before April 15th of the next calen-
daryear. A copy ofForm ST-10/11
is included in this brochure.
Example: In August of 1991 you purchase a
stereo system out-of-state for use in
Massachusetts and pay no sales tax.
You are required to submit Form
ST-10/11, with payment in full, by
April 15, 1992.
Note: Ifyou purchase a car or trailer on
which a use tax is due, you must
make your use tax payment to the
Registry of Motor Vehicles when you
register or title the vehicle. Use tax
payments for boats and aircraft are
made to DOR on Massachusetts
Form ST-6, Certificate ofPayment of
Sales or Use Tax.
IMakeOut-of- Ifyou are a registered Mass-
statePurchases achusetts sales/use tax vendor, you
forBusinessPur- must file your regular annual,
poses. HowDoI monthly or quarterly sales/use tax
return, including any use tax pay-
PayUse Tax?
ments, according to your sales/use
tax payment schedule.
Ifyou are not currently registered
as a Massachusetts sales/use tax
vendor, but do make out-of-state
purchases foryour business on
which a use tax is due, then you
should first register with the Com-
monwealth to pay use tax. To
register, you must file Massachusetts
registration Form TA-1 foryour
primary business location and Form
TA-2 for any additional locations.
There is no registration fee for
registering to pay use tax. Informa-
tion on use tax registration and pay-
ment requirements is detailed in
Form TA-1.
Example: You operate a business in Mass-
achusetts, purchase a fax machine
out-of-state and pay no sales tax.
Since the fax machine is for use in
your Massachusetts business you
are required to pay a 5 percent use
tax to the Commonwealth.
Are Tliere Yes. The penalty for late payment is
Penaltiesfor 1/2 percent per month (or fraction
LatePayments thereof) of the balance due, up to a
andReturns? maximum of25 percent. The penalty
for failure to file a return by the due
date is 1 percentper month (or frac-
tion thereof) of the balance due, up
to a maximum of25 percent. Ifyou
fail to pay the tax when due, interest
will also be charged at a rate of 18
percent peryear.
WhatifIPay Generally, ifyou pay a sales tax to
Sales Taxin another state on purchases to be i
AnotiierState? ^^^'^^ consumed or stored in the
Commonwealth, you are automatical-
— \
ly entitled to a credit up —to the 5
percent Massachusetts rate
against the Massachusetts use tax.
The credit is granted for sales tax
paid to another state if that state
allows a corresponding sales tax
exemption. With the exception of
Nevada, most states have cor-
responding sales tax exemptions:
however, a few states allow only
limited exemptions. In addition,
motor vehicle sales tax exemptions
vary from state to state. Ifyou need
more information about the status of
a specific state, please call DOR's
Taxpayer Assistance Bureau at j
\
[phone]. or toll-free in Mass-
achusetts at 1-800-228-0678. j'
Example: State X imposes a sales tax of4
percent and has a reciprocal agree-
ment with Massachusetts. You pur-
chase display cabinets in State X for
use in your Massachusetts business
and pay 314.000 plus 8560 sales tax
on the cabinets. Since State X has a
sales tax rate less than the 5 per-
cent Massachusetts rate, you are
responsible for remitting the differ-
ence to the Commonwealth. The tax
you owe is calculated the following
way:
8700 (5% Mass. sales tax obligation)
-8560 (40/0 State X sales tax payment)
8140 (1% use tax due to Mass.)
DoIHave to Yes. Ifyou make a purchase that
PayUse Taxon would be subject to Massachusetts
Telephoneor sales tax ifpurchased in the Com-
monwealth over the telephone or
Mail-Order
through mail-order from a state that
Purchases? —
imposes no sales tax or a sales
—
tax rate less than 5 percent you
are responsible for paying a use tax.
HowDoIFind Anypurchasethatisexemptfromthe
OutifMy salestaxisalsoexemptfromtheuse
PurchaseIs tax. Tofindoutifyourpurchaseisex-
ExemptFrom emptfromthesales/usetax, please
callDOR's TaxpayerAssistance
Use Tax?
Bureauat(617) 727-4490ortoll-freein
Massachusettsat 1-800-228-0678.
HowDoI TocompleteFormST-10/11, follow
Completethe theseinstructions:
Massachusetts • Enteryourname, addressand
IndividualUse SocialSecuritynumber.
TaxReturn • Completeallpurchaseinformation
onside2. Tocalculateanyallowa-
(FormST'10/11)?
bleusetaxcreditoneachpur-
chase, enterthesalestaxyoupaid
on thepurchaseor5percentofthe
salesprice, whicheverisless.
• EntertheamountinItem9onthe
backoftheforminItem2onthe
front. WritetheamountfromItem
10inItem4.
• SubtractItem4fromItem3. Enter
theresultinItem5.
• Enteranyinterestandpenalty
charges. Todetermineifyouare
liableforinterestand/orpenalty
charges, refertothesectioninthis
brochureentitled, "Are There
PenaltiesforLatePaymentsand
Returns?"
• AddItems5, 6and7andenterthe
resultinItem8. Thisisthetotal
amountdue. Makeyourcheck
payabletothe Commonwealthof
MassachusettsandwriteyourSo-
cialSecuritynumberinthelower-
leftcornerofthecheck.
• Signandmailthisform, alongwith
yourpayment, to: Massachusetts
DepartmentofRevenue, P.O. Box
7009, Boston, MA 02204.
—
WhatIsthe TheMassachusettsusetax im-
Massachusetts plementedin 1966togetherwiththe
—
Use Tax? Commonwealth'ssalestax applies
topurchasesmadeoutsideMass-
achusettsthatareused, consumedor
storedinthe Commonwealth. Unlike
salestaxwhichiscollectedbythe
merchantfrom whomyoumakeyour
purchase, usetax, inmostcases, is
paidbyyoudirectlytothestate. The
usetaxisleviedatthesame5percent
rateandonthesamepurchasesasthe
Massachusettssalestax.
WhoShould Bothindividualsandbusinessesarere-
payUse Tax? Quiredtopayusetaxwhenmaking
out-of-statepurchasesthataresubject
tousetax.
MustIPayUse Ifyou make a purchase in another
— —
TaxonAll state or another country that
Out-of-state ^^^^^ subject to Massachusetts
Purchases? sales tax ifpurchased in the Com-
monwealth, and pay no sales tax or
pay a sales tax rate less than the 5
percent Massachusetts rate, then
you are responsible forpaying a use
tax to the Commonwealth on that
purchase. This applies to purchases
that are used, consumed or stored
in Massachusetts and includes items
that are rented or leased.
IMakeOccasion- Ifyou are an individual making a
alOut-of-state purchase for personal use, and not
Purchasesfor for business use, you must submit
PersonalUse. Form ST-10/11 for any year in which
you make such purchases. ST-10/11
HowDoIPay is due, with payment in full, on or
Use Tax?
before April 15th of the next calen-
daryear. A copy ofForm ST-10/11
is included in this brochure.
Example: In August of 1991 you purchase a
stereo system out-of-state for use in
Massachusetts and pay no sales tax.
You are required to submit Form
ST-10/11, with payment in full, by
April 15, 1992.
Note: Ifyou purchase a car or trailer on
which a use tax is due, you must
make your use tax payment to the
Registry of Motor Vehicles when you
register or title the vehicle. Use tax
payments for boats and aircraft are
made to DOR on Massachusetts
Form ST-6, Certificate ofPayment of
Sales or Use Tax.
IMakeOut-of- Ifyou are a registered Mass-
statePurchases achusetts sales/use tax vendor, you
forBusinessPur- must file your regular annual,
poses. HowDoI monthly or quarterly sales/use tax
return, including any use tax pay-
PayUse Tax?
ments, according to your sales/use
tax payment schedule.
Ifyou are not currently registered
as a Massachusetts sales/use tax
vendor, but do make out-of-state
purchases foryour business on
which a use tax is due, then you
should first register with the Com-
monwealth to pay use tax. To
register, you must file Massachusetts
registration Form TA-1 foryour
primary business location and Form
TA-2 for any additional locations.
There is no registration fee for
registering to pay use tax. Informa-
tion on use tax registration and pay-
ment requirements is detailed in
Form TA-1.
Example: You operate a business in Mass-
achusetts, purchase a fax machine
out-of-state andpay no sales tax.
Since the fax machine is for use in
your Massachusetts business you
are required to pay a 5 percent use
tax to the Commonwealth.
Are There Yes. The penalty for late payment is
Penaltiesfor 1/2 percent per month (or fraction
LatePayments thereof) of the balance due, up to a
andReturns? maximum of25 percent. The penalty
for failure to file a return by the due
date is 1 percentper month (or frac-
tion thereof) of the balance due, up
to a maximum of25 percent. Ifyou
fail to pay the tax when due, interest
will also be charged at a rate of 18
percent peryear.
WhatifIPay Generally, ifyou pay a sales tax to
Sales Taxin another state on purchases to be
AnotherState? consumed or stored in the
Commonwealth, you are automatical-
—
ly entitled to a credit up —to the 5
percent Massachusetts rate
against the Massachusetts use tax.
The credit is granted for sales tax
paid to another state if that state
allows a corresponding sales tax
exemption. With the exception of
Nevada, most states have cor-
responding sales tax exemptions;
however, a few states allow only
limited exemptions. In addition,
motor vehicle sales tax exemptions
vary from state to state. Ifyou need
more information about the status of
a specific state, please call DOR's
Taxpayer Assistance Bureau at
[phone], or toll-free in Mass-
achusetts at 1-800-228-0678.
Example: State X imposes a sales tax of4
percent and has a reciprocal agree-
ment with Massachusetts. You pur-
chase display cabinets in State X for
use in your Massachusetts business
and pay $14,000 plus $560 sales tax
on the cabinets. Since State X has a
sales tax rate less than the 5 per-
cent Massachusetts rate, you are
responsible for remitting the differ-
ence to the Commonwealth. The tax
you owe is calculated the following
way:
$700 (5% Mass. sales tax obligation)
-$560 (4% State X sales tax payment)
$140 (1% use tax due to Mass.)
DoIHaveto Yes. Ifyou make a purchase that
PayUse Taxon would be subject to Massachusetts
Telephoneor sales tax ifpurchased in the Com-
monwealth over the telephone or
Mail-Order
through mail-order from a state that
Purchases? —
imposes no sales tax or a sales
—
tax rate less than 5 percent you
are responsible for paying a use tax.
HowDoIFind Anypurchasethatisexemptfromthe
OutifMy salestaxisalsoexemptfromtheuse
PurchaseIs tax. Tofindoutifyourpurchaseisex-
ExemptFrom emptfromthesales/usetax, please
Use Tax? callDOR's TaxpayerAssistance
Bureauat(617) 727-4490ortoll-freein
Massachusettsat 1-800-228-0678.
HowDoI TocompleteFormST-10/11, follow
Completethe theseinstructions:
Massachusetts • Enteryourname, addressand
IndividualUse SocialSecuritynumber.
TaxReturn • Completeallpurchaseinformation
onside2. Tocalculateanyallowa-
(FormST-10/11)?
bleusetaxcreditoneachpur-
chase, enterthesalestaxyoupaid
onthepurchaseor5percentofthe
salesprice, whicheverisless.
• EntertheamountinItem9onthe
backoftheforminItem2onthe
front. WritetheamountfromItem
10inItem4.
• SubtractItem4fromItem3. Enter
theresultinItem5.
• Enteranyinterestandpenalty
charges. Todetermineifyouare
liableforinterestand/orpenalty
charges, refertothesectioninthis
brochureentitled, "Are There
PenaltiesforLatePaymentsand
Returns?"
• AddItems5, 6and7andenterthe
resultinItem8. Thisisthetotal
amountdue. Makeyourcheck
payabletothe Commonwealthof
MassachusettsandwriteyourSo-
cialSecuritynumberinthelower-
leftcornerofthecheck.
• Signandmailthisform, alongwith
yourpayment, to: Massachusetts
DepartmentofRevenue, P.O. Box
7009, Boston, MA 02204.
— ^ 2
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