January 19, 1981

The ********** ("Corporation") is engaged in the business of renting motor vehicles. Its customers may choose "gas not included" or "gas included" vehicle rental plans.

Under "gas not included" plans, a customer who returns a vehicle with less fuel than it contained when he picked it up pays a separately-stated "refueling service" charge in addition to the basic rental charge. If the customer purchased gasoline for the vehicle during the rental, the "refueling service" charge is based on the difference between the amount of fuel in the vehicle at pick-up and at return. If the customer purchased no gasoline for the vehicle, the charge is based on miles traveled. The charge is calculated from tables developed for each type of vehicle in the Corporation's rental fleet and includes not only the cost of fuel but also other expenses associated with providing the refueling service.

A customer who returns a vehicle with as much gasoline as it contained at pick-up pays no "refueling service" charge.

You inquire whether these "refueling service" charges under "gasoline not included" plans are subject to the Massachusetts sales tax.

Massachusetts General Laws Chapter 64H, Section 2 imposes an excise on retail sales of tangible personal property in Massachusetts; Section 1(12)(a) of Chapter 64H provides in part that "sale" includes leases and rentals.

Retail sales of gasoline are exempt from the Massachusetts sales tax (Chapter 64H, Section 6(g)).

Under Chapter 64H, Section 1(14), the "sales price" on which the tax is based is "the total amount paid by a purchaser to a vendor as consideration for a retail sale." That section further provides that no deduction may be taken on account of the cost of property sold, materials used, or labor or service cost, and that any amount paid for any services that are a part of the sale must be included in the sales price.

Sales and Use Tax Regulation 830 CMR 64H.02 ("Motor Vehicles") provides in Division 6(b) that, with certain exceptions not here relevant, the "sales price" in the case of motor vehicle leases and rentals is the total charge.

Based on the foregoing, it is ruled that the "refueling service" charges under your "gas not included" rentals as described herein are part of the rental charge subject to the sales tax.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 81-10