September 14, 1979

You have requested a ruling as to whether heat pumps, duct work and related hardware sold by your client to a contractor for installation in a condominium located in Lynn, Massachusetts are exempt from the Massachusetts sales tax.

Massachusetts General Laws Chapter 64H, Section 6(dd) exempts from the sales tax, "Sales of equipment directly relating to any … heat pump system for the purpose of heating or otherwise supplying the energy needs of an individual's principal residence in the commonwealth."

A sale by a vendor to a contractor of such equipment will be exempt from the sales tax if it can be established at the time of sale that the equipment is within the exemption. It will normally be difficult or impossible for a contractor, working on a condominium under construction, to certify to whom the units will be sold and which units will be used as principal residences. Yet the contractor must be able to prove that the statutory requirements are met to make exempt purchases.

Based on the foregoing it is ruled that:

1. The exemption for heat pumps and related equipment extends to the related duct work and necessary hardware.

2. The exemption applies only to equipment installed in a Massachusetts inhabitant's principal residence in the Commonwealth. It does not extend to second residences, vacation homes, or non-residential property.

3. Purchases of heat pumps and related equipment by contractors are not subject to the sales tax if the contractor furnishes the vendor with an appropriate exempt use certificate and a statement from the individual owner of the property in which the equipment is being installed that is being installed to supply the energy needs of his principal residence.

4. Where a contractor cannot furnish such evidence at the time of his purchase of heat pumps and related equipment -- as in purchases for installation in condominiums under construction -- he must pay a sales tax upon the purchases. However, the contractor will be entitled to a reimbursement of so much of the sales tax as can later be established as having been imposed upon heat pumps and related equipment used to supply the energy needs of an individual's principal residence which is located in Massachusetts. The contractor, acting under a power of attorney from the vendor, would file an application for abatement on behalf of the vendor accompanied by sworn statements from the initial purchasers of the condominium units to the effect that their condominium units will be occupied by individuals who will use them as their principal residence.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH:JJW:FC

LR 79-33