SMALL BUSINESS TAX EXEMPTION AVAILABLE TO BUSINESS WITH UNDER 5 EMPLOYEES AND LESS THAN $1,000,000 IN ANNUAL REVENUE



Massachusetts businesses with five or fewer employees may be eligible for a tax exemption, provided that all requirements under MGL Chapter 64H Section 6 (qq) are met.

Under Massachusetts Law, the sale of gas, electricity, steam, and heating fuel are taxable when sold to a business. However, under this section of Massachusetts law cited above, these sales may be exempt if the product issued is used solely by a qualifying small business having five or fewer employees. In addition, that small business for whom the energy is purchased must have had gross income of less than $1,000,000 for the preceding calendar year, and must reasonably expect to have gross income of less than $1,000,000 for the current calendar year.

In response to legislation enacted last year, the Massachusetts Department of Revenue (DOR) has updated its regulation with regard to the State’s Business Exemption, which exempts from the state’s 5% sales tax the sale gas, steam, electricity and heating fuel from use by qualifying small businesses. If you qualify, all you have to do is complete and sign the Form ST-13 (Small Business Energy Exemption Certificate for Purchases on or After 1, 2006) and present it to your gas, steam, electric, or heating fuel vendor at the time of purchase.

Contact your business accountant or visit the Massachusetts Department of Revenue website for more information on this valuable tax exemption.