November 29, 1979

You request a ruling as to whether shipping containers leased to shippers and carriers in Massachusetts by your corporation will be subject to the Massachusetts sales and use tax.

These containers are designed for loading on railroad flatcars, trucks and ships. The containers will be used by the lessees to carry tangible personal property in interstate and foreign commerce. The containers will initially come into Massachusetts empty for first loading.

We note that your corporation is registered as a vendor pursuant to the Massachusetts sales tax statute.

Massachusetts General Laws Chapter 64H imposes a sales tax on sales at retail tangible personal property in Massachusetts by any vendor. "Sale" is defined by Section 1 of Chapter 64H to include lease or rental of tangible personal property. Section 6(a) of Chapter 64H exempts sales which the Commonwealth is prohibited from taxing under the Constitution or the laws of the United States.

The constitutionality of state taxes that impact on interstate commerce has been sustained so long as there is sufficient nexus to the state, fair appointment, lack of discrimination against interstate commerce, and fair relation to the services provided by the state. Complete Auto Transit v. Brady. 430 U.S. 274 (1977); Washington Department of Revenue v. Association of Washington Stevedoring Cos. 435 U.S. 734 (1978). Local taxes affecting foreign commerce are valid if they meet the additional tests of not subjecting foreign commerce to the risk of multiple taxation and not impairing the federal government's ability to "speak with one voice" when regulating commerce with foreign governments. Japan Line, Ltd. v. City of Los Angeles, - U.S. -, 99 S.Ct. 1813 (1979).

State sales and use taxes on railroad cars, airplanes or parts thereof are valid even though the property is to be used exclusively in interstate commerce. Southern Pacific Co. v. Gallagher, 306 U.S. 167 (1939); American Airlines, Inc. v. State Board of Equalization, 216 C.A.2d 180 (1963).

Based on the foregoing it is ruled that the lease or rental of shipping containers in Massachusetts is subject to the Massachusetts sales and use tax even though the containers are being acquired for the purpose of carrying goods in interstate or foreign commerce.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/JJW/LSB/jmcd

LR 79-50