October 27, 1980

You represent a client ("Company") that intends to sell truck tires in Massachusetts to common carriers engaged in interstate commerce and to distributors who will resell the tires to such common carriers. You ask several questions concerning the Massachusetts sales and use tax consequences of the Company's planned activities.

(1) You inquire whether the Company will be required to register as a Massachusetts vendor and collect the Massachusetts sales and use taxes if it stores tires in a public warehouse in Massachusetts for sale within and without the Commonwealth.

Massachusetts General Laws Chapter 64H, Section 7 provides that no person shall do business in Massachusetts as a vendor unless a registration shall have been issued to him for each place of business. Section 3 of that chapter requires each vendor to collect the sales tax from the purchaser. Chapter 64I, Section 4 provides that every vendor engaged in business in Massachusetts and making sales of tangible personal property for storage, use or other consumption in Massachusetts not exempted under Chapter 64I must collect the use tax from the purchaser.

For purposes of both the sales and use tax laws, Chapter 64H, Section 1(5) defines "[e]ngaged in business in the commonwealths" as including "having a business location in the commonwealth," and provides that a person who regularly maintains a stock of tangible personal property in Massachusetts for sale in the ordinary course of business is considered to have a business location in the Commonwealth.

Based on the foregoing, it is ruled that if the Company stores tires in a public warehouse in Massachusetts for sale within and without the Commonwealth, it will be required to register as a Massachusetts vendor and collect Massachusetts sales and use taxes on its sales subject to tax in Massachusetts.

(2) You inquire whether the Company will be required to register as a Massachusetts vendor and collect Massachusetts sales and use taxes if its only contact with Massachusetts is direct mail solicitation from outside the state and the shipment of tires into Massachusetts by common carrier.

Chapter 64H, Section 1(5) defines "[e]ngaged in business in the commonwealth" as including

"regularly soliciting orders for the sale of tangible personal property by salesmen, solicitors, or representatives in the commonwealth, unless such activity consists solely of solicitation by direct mail or advertising via newspapers, radio or television;"

and

"regularly engaging in the delivery of property in the commonwealth other than by common carrier or United States mail."

Based on the foregoing, it is ruled that if the Company's only contact with Massachusetts is direct mail solicitation from outside the state and the shipment of tires into Massachusetts by common carrier, it will not be required to register as a Massachusetts vendor and collect Massachusetts sales and use taxes.

(3) You inquire whether sales of truck tires to common carriers engaged in interstate commerce are exempt from tax in Massachusetts.

Chapter 64H, Section 6(a) exempts from tax sales which the Commonwealth is prohibited from taxing under the Constitution or laws of the United States.

State taxes having an impact on interstate commerce are constitutional so long as there is sufficient nexus between the taxpayer and the taxing state, and so long as the tax is fairly apportioned, does not discriminate against interstate commerce, and bears a fair relation to the services provided by the taxing state. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977); Department of Revenue v. Association of Washington Stevedoring Cos., 435 U.S. 734 (1978).

State taxes on the storage or use of railroad equipment and aircraft fuel, both to be consumed in interstate commerce, have been upheld by the United States Supreme Court against the argument that they violated the commerce clause of the federal Constitution. Southern Pacific Co. v. Gallagher, 306 U.S. 167 (1939); United Air Lines, Inc. v. Mahin, 410 U.S. 623 (1973).

Based on the foregoing, it is ruled that Massachusetts sales of truck tires to common carriers engaged in interstate commerce are subject to tax.

(4) Finally, you inquire whether the Company must collect sales or use taxes when it ships tires from a Massachusetts public warehouse to out-of-state purchasers in connection with out-of-state sales.

Chapter 64H, Section 2 imposes the sales tax on sales at retail in the Commonwealth. Under Chapter 64H, Section 6(b), sales of tangible personal property which the vendor is obligated under the terms of any agreement to deliver to a purchaser outside Massachusetts or to an interstate carrier for delivery to a purchaser outside Massachusetts are exempt from tax. Chapter 64I, Section 2 imposes the use tax upon the storage, use or other consumption in Massachusetts of tangible personal property purchased for storage, use or other consumption in Massachusetts.

Assuming that the tires are not sold for storage, use or other consumption in Massachusetts, their shipment out-of-state from a public warehouse in Massachusetts in connection with out-of-state sales gives rise to no obligation to collect the sales or use tax.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 80-73