ISSUE 1: Is the sale of propane gas, charcoal, lighting fluid or similar fuels used to operate a backyard barbecue grill taxable?

DIRECTIVE 1: The sale of propane gas, charcoal, lighting fluid or similar fuels used to operate a backyard barbecue grill is exempt from sales tax.

ISSUE 2: Is the sale of firewood, kindling, combustible fireplace logs or similar items used to operate a home fireplace or home wood stove taxable?

DIRECTIVE 2: The sale of firewood, kindling, combustible fireplace logs, or similar items used to operate a home fireplace or home wood stove is exempt from sales tax.

ISSUE 3: What are a vendor's responsibilities concerning sales of fuels used to operate a backyard grill, home fireplace or home woodstove?

DIRECTIVE 3: A vendor may presume that sales of fuel of a type and in a quantity appropriate for personal/family, noncommercial use to nonbusiness customers is exempt. A vendor is not required to obtain an exemption certificate from a purchaser in order to make such sales tax free. To sell tax free to a business or to sell tax free a type or quantity of fuel generally not appropriate for personal/family, noncommercial use when such fuel nonetheless is purchased for personal/family, noncommercial use, the vendor must obtain certain documentation from the purchaser as discussed below.

INTRODUCTION:

The purpose of this DOR Directive is to explain the exemption from sales tax for sales of propane gas and other types of fuels consumers generally buy at a retail store in carry home quantities for personal/family, household uses. The exemption for sales of utilities and fuels that are more commonly on metered delivery systems is discussed in Technical Information Release 90-7 and DOR Directive 92-3.

DISCUSSION OF LAW:

Massachusetts law imposes a five percent sales tax on all sales at retail of tangible personal property in Massachusetts by any vendor, unless an exemption applies. G.L. c. 64H, §§ 2, 6. Tangible personal property includes gas (G.L. c. 64H, § 1) and other heating fuel. Sales of fuel used for residential heating purposes are exempt under G.L. c. 64H, § 6(j). Legislation enacted by St. l990, c. 150 added the residential limitation for heating fuel exempt under this section.

1. Residential exemption

The term residential heating includes the heating of space, water or food for personal/family, noncommercial use. The sale of fuel of a type and in a quantity appropriate for heating space, water or food for personal/family, noncommercial use is presumed exempt when made to nonbusiness customers. Such fuel sold in a quantity generally not associated with personal/family, noncommercial use or to a business customer may be sold tax free only if the purchaser signs a statement that such fuel is purchased for personal/family, noncommercial use. Therefore, in general the sale to a nonbusiness customer of propane gas, charcoal or lighting fluid for backyard grills, firewood, kindling or combustible fireplace logs for home fireplaces or home wood stoves is presumed exempt.

2. Fuel for commercial use

The sale of fuel for commercial use is subject to sales tax, unless a specific exemption applies. See G.L. c. 64H, § 2. For example, an exemption from sales tax may apply to sales to a business with five or fewer employees under G.L. c. 64H, § 6(qq), to certain sales to governmental entities and charitable organizations u­nder G.L. c. 64H, §§ 6(d), (e), and to the sale of fuel used in manufacturing and for various other purposes under G.L. c. 64H, §§ 6(i), (j), or (r). Technical Information Release 90-7 discusses these exemptions in detail and DOR Directive 92-3 explains the different forms and procedures required for various energy exemptions. See also the Qualifying Small Business Exemption regulation, 830 CMR 64H.6.11.

3. Vendor's responsibilities

A vendor generally must collect tax on sales of tangible personal property and pay that tax to the Commissioner, unless an exemption applies and an exemption certificate is presented by the purchaser. G.L. c. 64H, § 2. However, a vendor may presume that a sale to a nonbusiness customer of fuel of a type and in a quantity appropriate for personal/family, noncommercial use is exempt and no certificate is necessary to make such a sale tax free.

A vendor selling to a business or selling a type, or in a quantity generally not appropriate for personal/family, noncommercial use must, to sell tax free, obtain from the purchaser a written statement that the purchase is for personal/family, noncommercial use. The statement must be signed by the purchaser, identify the purchaser by name, address and telephone number, and set out the date, nature and sales price of the fuel. The vendor must retain a copy of the statement together with the invoice or purchase order as part of the vendor's sales tax records. See the Massachusetts Record Retention regulation, 830 CMR 62C.25.1.

Also, to substantiate fuels sold tax free based on the presumption discussed in this Directive, the vendor should keep records detailing the type of fuel sold including the container sizes or amounts sold. This information should be kept as part of the vendor's sales tax records. See 830 CMR 62C.25.1.

4. Abatement procedure

If a vendor has collected tax on a sale of fuel and believes the tax was not due, the vendor may apply to the Commissioner for an abatement, using Form CA-6 within the time designated by G.L. c. 62C, § 37. The vendor must establish that the tax has been refunded to the purchaser. In the alternative, a taxpayer may apply for an abatement directly to the Commissioner by acting under a power of attorney for that purpose from the vendor. See the Abatement regulation, 830 CMR 62C.37.1, and Power of Attorney Form M-2848.

/s/Mitchell Adams
Mitchell Adams
Commissioner of Revenue

MA:HMP:mg

December 23, 1992

DOR-D 92-6