FACTS: Tom bought a boat in Massachusetts from his friend Ted, who had bought the boat for his personal use and does not sell boats in the regular course of business. The boat had no motor; consequently, it was not required to be registered. Tom has now installed a motor on the boat and the boat must therefore be registered. G.L. c. 90B, § 2. Tom paid no sales or use tax when he bought the boat.

ISSUE I: What are the sales or use tax consequences of Tom's purchase of the used boat?

ISSUE II: What are the consequences when Tom later registers the boat in Massachusetts?

DISCUSSION: Massachusetts imposes an excise upon retail sales of tangible personal property by any vendor. Unless the sale is otherwise exempt, the vendor must collect and pay over the sales tax. G.L. c. 64H, § 2.

Under G.L. c. 64H, § 6(c), the owner of goods originally acquired for personal or household use may sell those goods without incurring sales tax liability. Such sales are considered casual and isolated.

Casual and isolated sales of boats are not, however, exempt from the use tax imposed by G.L. c. 64I, § 3. The tax applies if the boat is used, stored, or otherwise consumed in Massachusetts and unless the purchaser is the spouse, mother, father, brother, sister or child of the seller. G.L. c. 64H, § 6(c); G.L. c. 64I, § 7(b). Since the use tax is due on the storage, use or other consumption of the boat in Massachusetts, it does not matter whether or not the boat must be registered here. Tom should, therefore, have paid a use tax (calculated at 5% of the purchase price) to the Department of Revenue [DOR] by the twentieth day of the month following the month the boat was first used here. G.L. c. 62C, § 16(i).

In order to register his boat now, Tom must show that he paid any tax due under G.L. c. 64I. Id., § 26A. Since he did not do so, the boat cannot be registered until Tom pays the tax due, plus interest and penalties from the date the tax should have been paid. Id.

DIRECTIVE I: Tom's purchase of the boat is subject to the use tax. This tax is due if the boat is used, stored or otherwise consumed in Massachusetts and must be paid regardless of whether or not the boat is registered here.

The use tax may be paid (on Form ST-6, Certificate of Payment of Sales or Use Tax, or Form ST-11, Individual Use Tax Return) at certain DOR locations, and at Registries with a Marine and Recreation Section, Division of Law Enforcement, staffed with DOR personnel. For a list of these offices, contact:

Department of Revenue
100 Cambridge Street
Boston, MA 02204
(617) 727-2505
(617) 727-2510

The tax is due on or before the twentieth day of the month following the month of first use here. G.L. c. 62C, § 16(i).

DIRECTIVE II: Because Tom did not pay the use tax when it was due, he is liable for the tax, plus applicable interest and penalties from the date the tax should have been paid.

REFERENCE: G.L. c. 62C, § 16(i); G.L. c. 64H, §§ 2, 6(c); G.L. c. 64I, §§ 3, 7(b), 26A; G.L. c. 90B, § 2.

/s/Stephen W. Kidder
Stephen W. Kidder
Commissioner of Revenue

December 11, 1989

DOR D 89-19


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.