How many of you answer question #33 on your Massachusetts FORM 1, PAGE 3, which asks you to report “Use tax due on out-of-state purchases?"
Well, as you may have guessed, this is where Massachusetts seeks to collect taxes on all of our out of state purchases, including online purchases.
Yes, you are correct. If Massachusetts is not collecting sales tax then they expect us to report and pay a “use” tax on any out of state purchases that would be subject to Massachusetts sales tax.
For all of the consumers out there that make large purchases in New Hampshire or other states to avoid the Massachusetts sales tax, BEWARE. As of now, it is based on the honor system. However, technology is making this process easier and easier to audit.
How difficult do you think it is for the Mass DOR to ask NH retailers to submit a list of all purchases made by consumers with a Massachusetts address? How often do you think the Mass DOR is auditing retail businesses that border Massachusetts?
The next time you decide to drive to NH to make a large purchase to avoid the sales tax, you might want to think again.
Is it worth the interest and penalties you would pay if you get caught? Or, ask yourself: Do we have a responsibility to do our part for the Massachusetts economy?