December 5, 1979

You request a ruling with respect to the sales and use taxation of sales and rentals of equipment by your company to customers who will use the equipment in the performance of government contracts. You also ask what documentation is required to substantiate exemption under these circumstances.

Since you are in the office equipment business, it is assumed for purposes of this ruling that the equipment in question does not constitute "construction equipment" within the meaning of Massachusetts General Laws Chapter 64H, Section 6(f).

Massachusetts General Laws Chapter 64H, Section 6(d) exempts sales to the United States, the Commonwealth of Massachusetts or any political subdivision thereof, or their respective agencies. A purchaser is an "agency" for purposes of this provision only if it is a regularly constituted department of government or an entity wholly owned by the government and exercising exclusively governmental functions. First Agricultural National Bank v. State Tax Commission, 353 Mass. 172 (1967) (reversed on other grounds, 392 U.S. 339 (1968)).

Under Chapter 64H, Section 8(a), all gross receipts of a vendor from the sale of tangible personal property are presumed to be subject to tax until the contrary is established.

Based on the foregoing, it is ruled that your company's sales and rental transactions will be taxable unless, under the contracts of sale or lease and in practice, title to, responsibility for payment for, and control over the equipment will vest in the United States, the Commonwealth of Massachusetts or a political subdivision thereof, or their respective agencies as defined above.

If your company's sales and rentals are exempt under this rule, it must maintain records sufficient to overcome the presumption of taxability. A written certification by an authorized representative of the purchaser that title to, responsibility for payment for, and control over the equipment are vested in the United States, the Commonwealth of Massachusetts or a political subdivision thereof, or their respective agencies as defined above, will suffice for this purpose.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/JXD/jmcd

LR 79-51