FACTS: Diva Corporation is a manufacturer registered as a Massachusetts vendor. Fan Corporation, also a registered vendor, purchases property from Diva, and resells it in the regular course of business to Eddie, a consumer in the Commonwealth. Diva ships the property directly to Eddie.

For purposes of this Directive, it is assumed that Diva and Fan are engaged in business in the Commonwealth within the meaning of G.L. c. 64H, § 1(5).

ISSUE: What are the sales tax consequences of Diva's drop shipment to Eddie, a consumer in the Commonwealth, made pursuant to a retail sale by Fan, a retailer engaged in business in the Commonwealth?

DISCUSSION: The sales tax is imposed upon sales at retail of tangible personal property in the Commonwealth by any vendor. G.L. c. 64H, § 2. All gross receipts of a vendor from sales of tangible personal property are presumed to be from retail sales subject to tax unless the vendor takes a resale certificate in good faith from a purchaser who is a registered Massachusetts vendor. G.L. c. 64H, § 8.

DIRECTIVE: The sale by Fan to Eddie is a retail sale. Fan must collect the sales tax from Eddie, and that tax is debt from Eddie to Fan, recoverable in the same manner as other debts.

The sale by Diva to Fan is presumed to be a taxable sale, unless Diva takes a resale certificate in good faith from Fan.

REFERENCE: G.L. c. 62, §§ 1(5), 2, 8.

/s/Ira A. Jackson
Ira A. Jackson
Commissioner of Revenue

August 20, 1986

DOR-D 86-5

This Directive represents the official position of the Department of Revenue on the application of the law to the facts as stated. The Department and its personnel will follow this Directive, and taxpayers may rely upon it, unless it is revoked or modified pursuant to 830 CMR § 62C.01(5)(e). In applying this Directive, however, the effect of subsequent legislation, regulations, court decisions, Directives, and TIRs must be considered, and Department personnel and taxpayers may rely upon this Directive only if the facts, circumstances and issues presented in other cases are substantially the same as those set forth in this Directive.