Taxes / State tax rules / Massachusetts
Selling on eBay, Poshmark or Etsy from Massachusetts: sales tax and 1099-K rules
Since October 1, 2019, G.L. c. 64H, § 34 has required a marketplace facilitator whose Massachusetts sales, its own plus those it facilitates, exceed $100,000 in the prior or current taxable year to report all taxable sales made through its marketplace and collect and remit the 6.25% sales tax on them. Massachusetts sets its own 1099-K figure: the Department of Revenue's report to the Legislature says platforms must report a payee's gross payments of $600 or more that are taxable under G.L. c. 62, whatever the number of transactions, a rule announced in TIR 17-11 and codified in 830 CMR 62C.8.1.
General information, not tax advice. Check with a tax professional about your own situation.
Checked against the official pages listed below on .
Massachusetts in short
- General sales tax:
- Yes, 6.25% state rate
- Marketplace facilitator law:
- Yes: G.L. c. 64H, § 34 (St. 2019, c. 41, § 32), since Oct 1, 2019
- When a marketplace must collect:
- sales within the commonwealth of more than $100,000 in the prior or current taxable year, counting its direct sales and the sales it facilitates for marketplace sellers (§ 34(b) and (c))
- Form 1099-K:
- State threshold: gross payments to a payee of $600 or greater that are subject to taxation under G.L. c. 62, regardless of the number of transactions
Who collects the tax on a marketplace sale
A marketplace facilitator over the threshold, located in Massachusetts or not, reports all taxable sales made through its marketplace and collects and remits the tax on all of them, its own direct sales and those it facilitates for marketplace sellers (§ 34(b) and (c)). St. 2019, c. 41, § 109 made the section effective October 1, 2019.
If you sell only through marketplaces
Under § 34(d), sales a marketplace facilitator reports and collects on for a remote marketplace seller aren't counted as that seller's Massachusetts sales, and the seller isn't liable to report them. The statute doesn't separately address registration for a seller located in Massachusetts, and the Department of Revenue's guidance couldn't be read for this check.
The law: G.L. c. 64H, § 34 (St. 2019, c. 41, § 32), effective .
"A remote marketplace facilitator whose sales within the commonwealth in the prior taxable year or the current taxable year exceed $100,000 shall report all taxable sales made through such marketplace and collect and remit tax on all such sales"
"such sales shall not be counted as a part of the remote marketplace seller's sales within the commonwealth and the remote marketplace seller shall not be liable to report those sales"
"Sections 31 to 35 shall take effect on October 1, 2019."
Sources: General Laws, Chapter 64H, Section 34: Remote retailers and marketplace facilitators; Acts of 2019, Chapter 41.
Massachusetts's sales tax
Massachusetts imposes its sales tax on vendors' retail sales of tangible personal property, and of services performed in the commonwealth, at 6.25% of gross receipts (G.L. c. 64H, § 2).
"at the rate of 6.25 per cent of the gross receipts of the vendor from all such sales of such property or services"
Sources: General Laws, Chapter 64H, Section 2: Sales tax; services tax; imposition; rate; payment.
Form 1099-K: Massachusetts and the federal test
G.L. c. 62C, § 8 has payers report income paid to Massachusetts payees on the federal basis, but lets the commissioner require additional reporting that differs from the federal rules. Under that authority, the Department of Revenue's report to the Legislature says, TIR 17-11 required third party settlement organizations (online payment intermediaries) to report gross payments of $600 or more to a payee, regardless of the number of transactions, and 830 CMR 62C.8.1 (2020) codified the rule. The report, undated on its face (its PDF metadata says June 2021), calls this the only additional reporting requirement imposed under § 8 to that date. The Department's own web pages couldn't be read for this check, so the page relies on the report and the statute.
| Test | Dollar amount | Transactions | Wording |
|---|---|---|---|
| Massachusetts | $600 | No count | gross payments to a payee of $600 or greater that are subject to taxation under G.L. c. 62, regardless of the number of transactions |
| Federal (IRS) | Over $20,000 | More than 200 | Over $20,000 in more than 200 transactions, through one app or marketplace in a calendar year |
"TPSOs must report the gross amount paid in settlement to a payee when such amount is $600 or greater and is subject to taxation under M.G.L. c. 62, regardless of the number of transactions between the TPSO and the payee."
"the commissioner may require additional reporting requirements that differ from those required by the federal government under the Code"
Rule: 830 CMR 62C.8.1, under G.L. c. 62C, § 8. Applies from: the 2017 calendar year, under TIR 17-11; codified in 830 CMR 62C.8.1 in 2020.
The federal test, for comparison: the IRS says a payment app or online marketplace must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, and adds: "However, they may send you a Form 1099-K with lower amounts and/or transactions." (Understanding your Form 1099-K, reviewed ). The Instructions for Form 1099-K count both parts for the calendar year, through each platform separately, and say the box 1a gross amount is figured without adjustments for credits, discounts, fees, refunds or shipping, so a 1099-K figure is not the same as profit. More on the federal rule in Form 1099-K for resellers.
Sources: Report on Commissioner of Revenue's Use of Additional Reporting Requirements; General Laws, Chapter 62C, Section 8: Annual reports by entities doing business in the state; trustee and fiduciary reports.
Worked examples
A $40 sale to a Boston buyer
A marketplace over the threshold collects the 6.25% sales tax: $40 x 6.25% = $2.50, and reports the sale with its other taxable sales through the marketplace under § 34.
$700 paid to a Massachusetts seller on one platform
$700 in 2026 through one platform is far below the federal test (over $20,000 in more than 200 transactions) but over the $600 figure in 830 CMR 62C.8.1 as the Department's report describes it, so on the rule's wording the platform reports it, if the payments are taxable under G.L. c. 62. At $500, the Massachusetts figure isn't reached.
A remote seller with $60,000 on marketplaces and $50,000 direct
Under § 34(d), the $60,000 a marketplace collects on isn't counted as the remote seller's Massachusetts sales, so its own count is the $50,000 of direct sales, under the $100,000 remote retailer threshold in § 34(a). At $120,000 of direct sales, it would be over.
Edge cases and details
- A marketplace can be physical: G.L. c. 64H, § 1 defines it as a physical or electronic forum, including a shop, a store, a booth, a catalogue or a website, where a marketplace seller's property is offered for sale. A person who merely provides payment processing services isn't a marketplace facilitator.
- The commissioner may grant a facilitator a waiver when it can presume in good faith that marketplace sellers required to register collect and remit the tax; under a waiver the sellers remit and are subject to audit (§ 34(f) and (h)).
- A facilitator is relieved of liability, including penalties and interest, for errors caused by reasonable reliance on an invalid exemption certificate or incorrect information from the seller, the purchaser or the commonwealth, if it made a reasonable effort to get accurate information (§ 34(i)).
- St. 2019, c. 41, § 106 says the 2019 changes don't override pre-existing law or affect tax liability that accrued before the act took effect.
- The report says the commissioner lowered the threshold to increase transparency and tax compliance, principally among individuals selling goods and services who receive payments from TPSOs, and that the change is the only additional reporting requirement imposed under G.L. c. 62C, § 8 to that date.
What to do
- Keep each marketplace's sales report showing the Massachusetts tax it collected on your sales.
- If you also sell in person or through your own site, check the Department of Revenue's guidance or ask a tax professional about registering for those sales; § 34 covers sales made through a marketplace.
- If payments you receive through a platform are subject to Massachusetts income tax (G.L. c. 62), the platform may report them from $600 a year, far below the federal test; compare any 1099-K with the platform's sales report and check with a tax professional about how it fits your returns.
Common questions
When did Massachusetts start making marketplaces collect sales tax?
October 1, 2019. St. 2019, c. 41, § 109 made the new G.L. c. 64H, § 34 effective that day; it requires a facilitator with more than $100,000 of Massachusetts sales to collect on all taxable sales made through its marketplace.
What is the Massachusetts 1099-K threshold?
$600. The Department of Revenue's report to the Legislature says third party settlement organizations must report a payee's gross payments of $600 or more that are taxable under G.L. c. 62, regardless of the number of transactions (TIR 17-11, codified in 830 CMR 62C.8.1). The federal test is over $20,000 in more than 200 transactions.
Why did I get a 1099-K for under $20,000 in Massachusetts?
Because Massachusetts uses its own $600 figure for gross payments to payees taxable under G.L. c. 62, under authority G.L. c. 62C, § 8 gives the commissioner to require reporting that differs from the federal rules. The IRS also says platforms may send a 1099-K below the federal threshold.
Does a Massachusetts 1099-K mean I owe tax on that amount?
Not by itself. The form reports gross payments, and the IRS instructions for Form 1099-K say the gross amount isn't reduced for fees, refunds or shipping. Whether any of it is taxable income depends on your situation; check with a tax professional.
Related
General information, not tax advice
This page summarizes Massachusetts's own published pages and statutes as read on , and the IRS's 1099-K pages. It doesn't say what you should file, register for or pay. Rules depend on your situation and change: check with a tax professional, or with the state's revenue department.
Sources
Official pages this page is built from, with the day each was read.
- The General Court of the Commonwealth of Massachusetts: General Laws, Chapter 64H, Section 34: Remote retailers and marketplace facilitators; read . Thresholds for remote retailers and facilitators; facilitator collects on all sales through the marketplace; facilitated sales not counted for remote sellers; waivers; liability relief.
- The General Court of the Commonwealth of Massachusetts: General Laws, Chapter 64H, Section 1: Definitions; read . Definitions of marketplace (physical or electronic), marketplace facilitator and marketplace seller; payment processors excluded.
- The General Court of the Commonwealth of Massachusetts: General Laws, Chapter 64H, Section 2: Sales tax; services tax; imposition; rate; payment; read . Sales tax rate of 6.25% of gross receipts.
- The General Court of the Commonwealth of Massachusetts: Acts of 2019, Chapter 41, dated ; read . Section 32 inserts § 34; section 109 makes sections 31 to 35 effective October 1, 2019; section 106.
- Massachusetts Department of Revenue (report filed with the General Court): Report on Commissioner of Revenue's Use of Additional Reporting Requirements; read . TIR 17-11: TPSOs report gross payments of $600 or more taxable under G.L. c. 62 regardless of transactions; 830 CMR 62C.8.1 (2020) codified it; only additional requirement under c. 62C, § 8; first applied to 2017.
- The General Court of the Commonwealth of Massachusetts: General Laws, Chapter 62C, Section 8: Annual reports by entities doing business in the state; trustee and fiduciary reports; read . Payers report income paid to Massachusetts payees on the federal basis; the commissioner may require reporting that differs from the federal rules.
- IRS: Understanding your Form 1099-K, reviewed . The federal 1099-K test.
- IRS: Instructions for Form 1099-K, reviewed . Both parts of the federal test counted for the calendar year.
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