Responsibility for Collecting Sales Taxes
Responsibility for Collecting Sales Taxes
Collecting sales tax when 4-H groups sell products
Even though 4-H is an organization that is not required to pay income tax to the state or federal government, 4-H organizations are not exempt from paying sales tax on items they purchase and may be required to collect a 5% sales tax on the products they sell.
Common Questions Regarding Massachusetts Sales and Use Tax
- 4-H is a tax-exempt organization not a store, why do we have to collect sales tax?
- What constitutes sales in the regular course of business?
- What products are we required to collect the 5% sales tax on?
- Does 4-H need to collect sales tax on food sold at a bake sale?
- Is the definition of sales in the regular course of business for the same for meals?
- How does a 4-H organization go about collecting sales tax and paying it to the state?
A “Treasurer’s Checklist for Collecting Massachusetts Sales Tax on Products Sold” follows the questions and responses.
The Massachusetts Department of Revenue (DOR) has ruled that tax-exempt organizations that sell or rent tangible personal property in the regular course of business are considered vendors and are required to collect sales/use tax.
In a ruling by the Massachusetts Department of Revenue, regular sales was defined as those occurring over a period 48 hours or more in a calendar year.
For example: If a 4-H organization sold cookies at a food booth 5 hours a day for 10 days, the organization has 50 hours of sales time and would be required to collect sales tax and remit it to the Department of Revenue.
3. What products are we required to collect 5% sales tax on if sales are considered in the regular course of business?
It is easier to list the products that you DO NOT have to collect sales tax on. These are:
- Admission to events - i.e., fair, livestock event, etc.
- Sales of periodicals, including magazines.
- Personal and professional services – i.e. a carwash or a haircut.
- Sales of clothing with a cost of a single item less than $175. Tax needs to be collected on the cost of a single item above $175. For example: A suit costs $200, the tax would be 5% × (200-175) = $1.25 tax.
NOTE: There are specialty clothing items that are taxed; consult the Massachusetts Department of Revenue (DOR) Guide to Sales and Use Tax for more details.
The Department of Revenue states that meals sold that do not require significant further preparation, whether prepackaged or not, constitute a meal and the seller is required to collect a sales tax.
- Beverages: Poured beverages, such as a cup of coffee or a fountain soda.
- Unpackaged baked goods: Unpackaged baked goods or other snacks sold by a store are taxable unless they are sold in units of six or more for off-premises consumption.
- Baked goods: Unpackaged baked goods generally are taxable unless sold in units of six or more for off-premises consumption.
- Hot foods: Any heated prepared food item.
- Entrees: Single-portion-size entrees, such as lasagna or quiche, prepared for immediate consumption, if items are heated. Refrigerated items are also taxable if the store provides heating units (typically microwave ovens) in which customers may heat the entrees. Such entrees are taxable, whether they are prepackaged or not.
- Combination plates: Prepared foods sold as a unit in a manner reasonably and commonly considered a meal, heated or not.
- Quick meals: Quick meals prepared for immediate consumption such as hot dogs, hamburgers, pizza slices or soup, if heated.
See the Massachusetts Guide to Sales Tax on Meals for more information.
Yes, if the sales of a food product that is taxable extend longer than 48 hours, sales taxes are required to be collected on those food items, and remitted to the Massachusetts Department of Revenue.
Step 1: Register
To register to collect Massachusetts sales/use tax, vendors must file a Form TA-1 (Massachusetts Trustee Tax Application for Original Registration) with Department of Revenue (DOR) for their primary place of business and Form TA-2 (Application for Additional Registration) for each additional business location. These forms are available on the DOR website at https://www.mass.gov/orgs/massachusetts-department-of-revenue.
Vendors may file the electronic equivalent of Form TA-1 and/or TA-2 via DOR’s Online Application for Registration, which is available on the DOR website at https://www.mass.gov/orgs/massachusetts-department-of-revenue. By registering online, vendors can download a temporary registration certificate, which enables them to do business immediately.
After processing an application for registration, DOR will issue the vendor a Sales and Use Tax Registration Certificate (Form ST-1) for each business location. Form ST-1 must be displayed in a prominent location on the business premises.
Step 2: Collect Sales tax on Purchases and Remit to Massachusetts Department of Revenue
Different schedules must be followed for filing returns and paying sales/use tax depending on the amount of tax vendors expect to collect from their customers in a year. In order to be considered timely-filed, all returns must be postmarked by the U.S. Postal Service at least two days prior to the due date of the return. The following chart shows the different schedules for filing returns.
PDFs of various Sales & Use Tax forms can be found at the DOR website
Annual Sales/Use Tax Collected
Return Filing Requirement
$100 or less
Annually due 20 days after the end of the filing period – i.e., Jan 20.
Payment due with return
From $101 up to $1,200
Quarterly due 20 days after end of the filing period – i.e., April 20, July 20, Oct. 20, Jan. 20.
Payment due with return.
$1,201 of more
Monthly due 20 days after end of the filing period – i.e., February 20 for January filing period.
Payment due with return
Treasurer’s Checklist for Collecting Massachusetts Sales Tax on Products Sold
Check off the following steps as you go along to ensure that you have complied with all regulations and procedures.
- Does sales tax need to be collected for this event/activity/fundraiser? See items 2-5 in this document for more detail.
- If you are selling food you need to determine if you need to collect sales tax. You may also need a food vendor’s permit from the local Board of Health.
- Ensure that your organization has registered with the Massachusetts Department of Revenue as a vendor (Form TA-1 for original registration).
- At the end of the event, remit 5% of the total revenue generated from selling taxable items to the Department of Revenue in a timely manner. See item 6 in this document.
To calculate the tax due, multiply the total revenue by .05.
For example, total revenue of $200 would be $200 x .05 = $10: this means $10 would be due to DOR in taxes.
- Consult the Department of Revenue for the appropriate forms: https://www.mass.gov/orgs/massachusetts-department-of-revenue.
- Mail a check for the total sales tax due to the Mass. Dept. of Revenue, P.O. Box 7043, Boston, MA, 02204.