May 22, 1980

Your client, *********** (the "Corporation") purchases computer equipment from ********** , a registered Massachusetts vendor (the "Manufacturer"). The Corporation is not organized in Massachusetts or registered as a Massachusetts vendor. The Corporation sells the equipment to ********** (the "Partnership") a limited partnership of which the Corporation is a general partner, and the Partnership leases the equipment to a major corporation with operations in Massachusetts (the "Lessee"). The Manufacturer delivers the equipment directly to the Lessee's office in Massachusetts for use in Massachusetts. Neither the Corporation nor the Partnership has employees or offices in Massachusetts.

You inquire whether the Manufacturer must collect the Massachusetts sales tax on its sale to the Corporation, and whether the Corporation must register as a Massachusetts vendor.

Massachusetts General Laws Chapter 64H, Section 7 requires every person doing business in Massachusetts as a vendor to register with the Department of Revenue. Chapter 64H, Section 8 states:

"It shall be presumed that all gross receipts of a vendor from the sale of tangible personal property are from sales subject to tax until the contrary is established. The burden of proving that a sale of tangible personal property by any vendor is not a sale at retail shall be upon such vendor unless he takes from the purchaser a certificate to the effect that the property is purchased for resale."

Section 8 further provides that the certificate shall relieve the vendor from the burden of proof only if taken in good faith from a registered vendor.

Section 1(13) of Chapter 64H provides:

"The delivery in the commonwealth of tangible personal property by an owner or former owner thereof, or by a factor, or agent of such owner, former owner or factor, if the delivery is to a consumer or to a person for redelivery to a consumer, pursuant to a retail sale made by a retailer not engaged in business in the commonwealth, is a retail sale in the commonwealth by the person making the delivery. He shall include the retail selling price of the property in his gross receipts."

Under Chapter 64H, Section 1(5), "engaged in business in the commonwealth" includes "having a business location in the commonwealth," and a person who regularly leases out tangible personal property for use in Massachusetts is considered to have a business location in the Commonwealth.

Based on the foregoing, it is ruled that:

(1) If the Partnership regularly leases out computer equipment or other tangible personal property for use in Massachusetts, it must register as a Massachusetts vendor and collect the Massachusetts sales tax from the Lessee as each payment comes due; moreover, unless the Corporation registers as a Massachusetts vendor and furnishes a resale certificate to the Manufacturer, the sale by the Manufacturer to the Corporation is taxable.

(2) If the Partnership does not regularly lease out tangible personal property for use in Massachusetts, the Manufacturer must include the selling price of the equipment in its Massachusetts gross receipts.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/JXD/jmcd

LR 80-29