Commonwealth Conversations: Revenue

From the Taxpayer Advocate mailbag ... saving money on out-of-state purchases of boats or motor vehicles

Cash for clunkers may have ended, but a sales tax issue raised by this program will carry on.

This particular issue involves Massachusetts residents who purchase motor vehicles or boats from out-of-state dealers, which is not all that uncommon.

Please be advised that if you purchase a boat or vehicle from an out-of-state dealer the sales tax calculation will not allow the value of the trade in unless the dealer has already registered as a Massachusetts registered vendor.

If the vendor is not so registered, you will pay sales tax on the purchase price of the vehicle/boat without factoring the value of the trade in.

However, to register as a Massachusetts vendor is painless, and, equally important, free. Have the dealer go here to register. After that is done and you make your purchase, you will pay sales tax on the net sales price due, which reflects the value of the trade in. On a trade of $3,000 that will save you $187.50 in sales tax.

Please keep this in mind so you are not surprised at the Registry of Motor Vehicles or at boat registration when you attempt to register and title your new vehicle.

You may contact Dennis Buckley, Taxpayer Advocate, here, with your questions.

The 6.25% solution will solve this problem

Some retailers, according to the Boston Globe, are wondering why they can't run ads saying they will pay the state sales tax.

Well, as the Globe story pointed out, Chapter 64H, Section 23 of the Massachusetts General Laws expressly prohibits such advertising. The purpose of the law is to prevent confusion in the auditing of sales tax payments and to make sure consumers know how much in sales tax they have paid, which can become an issue if an item has to be returned and the consumer is due back both the purchase price and the sales tax.

There is also Chapter 64H, Section 5 of the Massachusetts General Laws, which makes it clear that sales tax must be stated separately from the sales price.

Absent a change in these laws, there is one easy way for retailers to accomplish their goal of "paying the sales tax" ....  just run a sale of 6.25% off the purchase price or provide a rebate equal to 6.25% of the purchase price.

DOR works with AARP to train volunteer Tax-Aides

The Massachusetts Department of Revenue is proud of its partnership with the American Association of Retired Persons (AARP) and the Federal Internal Revenue Service (IRS) to train AARP Tax-Aides.

AARP Tax-Aide is the nation's largest, free tax assistance and preparation program. If you're looking for a civic engagement volunteering opportunity, this is a great program to join. Helping those without resources to fill out their tax forms is a fulfilling and challenging community service.

The Tax-Aide volunteers assist individuals with the preparation of state and federal basic income tax returns. More than 24,000 Massachusetts residents received help through this program last year from some 600 trained volunteers. From Feb. 1 to April 15, the volunteers provide face-to-face assistance in locations such as senior centers and libraries.

Those interested in volunteering should call 1-866-448-3621 or see this AARP press release for more information. 

If you have volunteered in the past for this program and would like to share your experience, feel free to leave a comment which might motivate others to join in.