March 2, 1981

You inquire whether your client ("Corporation"), a foreign corporation engaged in the business of conducting and marketing "personal development training seminars," is subject to the Massachusetts corporate excise and Massachusetts sales and use taxes.

The Corporation's business falls into two categories:

(1) The Corporation itself conducts seminars, for which each participant pays a flat fee of about $400. The fee includes the cost of course materials supplied by the Corporation.

(2) The Corporation contracts with client businesses to allow them to conduct the seminars for their own personnel. Employees of the Corporation train employees of the client businesses to lead the seminars, and supply them with problems, new developments, and monthly newsletters for use in teaching. Client businesses pay the Corporation $75 to $140 per employee-participant. You state that in this case the Corporation supplies course materials costing from $5 to $15 per participant, but you do not specifically state whether a separate charge is made therefore.

The Corporation has no sales offices in Massachusetts, and none of its employees reside in the Commonwealth. It may or may not

(1) conduct seminars itself in Massachusetts or contract with client businesses in Massachusetts to allow them to conduct the seminars;

(2) solicit business from potential Massachusetts customers by telephone from out-of-state or directly within Massachusetts through traveling sales personnel;

(3) participate in trade shows or conventions in Massachusetts; or

(4) advertise in trade journals distributed in Massachusetts.

Corporate excise

Massachusetts General Laws Chapter 63, Section 39 requires every foreign corporation exercising its charter, qualified to do business or actually doing business in the Commonwealth, or owning or using any part or all of its capital, plant or any other property in the Commonwealth, to pay the corporate excise. That section further provides that

"[t]he excise...is due and payable on any one or all of the following alternative incidents:

(1) The qualification to carry on or do business in this state or the actual doing of business within the commonwealth in a corporate form. The term 'doing business' as used herein shall mean and include each and every act, power, right, privilege, or immunity exercised or enjoyed in the commonwealth, as an incident to or by virtue of the powers and privileges acquired by the nature of such organizations, as well as, the buying, selling or procuring of services or property.

(2) The exercising of a corporation's charter or the continuance of its charter within the commonwealth.

(3) The owning or using any part or all of its capital, plant or other property in the commonwealth in a corporate capacity.

It is the purpose of this section to require the payment of this excise to the commonwealth by foreign corporations for the enjoyment under the protection of the laws of the commonwealth, of the powers, rights, privileges and immunities derived by reason of the corporate form of existence and operation."

Based on the foregoing, it is ruled that:

(1) The Corporation will be subject to the Massachusetts corporate excise if it

(a) conducts seminars in Massachusetts;

(b) contracts to allow one or more clients to conduct seminars in Massachusetts, and

(i) the contract is executed in Massachusetts; or

(ii) the Corporation's employees come into Massachusetts to train, supervise or advise client instructors, or to deliver course materials; or

(c) solicits business in Massachusetts directly through its sales personnel;

(2) The Corporation will not be subject to the Massachusetts corporate excise if it engages only in one or both of the following activities in Massachusetts:

(a) solicitation of business by telephone from out-of-state; or

(b) advertising in trade journals distributed in Massachusetts.

Activities undertaken in connection with client-conducted seminars but not specifically ruled upon herein, and participation in trade shows or conventions in Massachusetts, may or may not subject the Corporation to the Massachusetts corporate excise, depending on the facts and circumstances of each case.

Sales and use taxes

Every vendor engaged in business in Massachusetts within the meaning of Chapter 64H, Section 1(5) must collect and pay over sales and use taxes on (1) its retail sales of tangible personal property in Massachusetts; and (2) its retail sales of tangible personal property outside Massachusetts for storage, use or other consumption in Massachusetts. Chapter 64H, Sections 2 and 3; Chapter 64I, Sections 2 and 4. "Sale at retail" does not include "professional, insurance, or personal service transactions which involve no sale or which involve sales as inconsequential elements for which no separate charges are made." Chapter 64H, Section 1(13)(c).

Sales of books required for instructional purposes in educational institutions are exempt from tax. Chapter 64H, Section 6(m).

Based on the foregoing, it is ruled that if the Corporation is engaged in business in Massachusetts within the meaning of Chapter 64H, Section 1(5), it must (1) register as a Massachusetts vendor and (2) collect and pay over sales and use taxes on separately-stated charges for course materials sold in Massachusetts or sold outside Massachusetts for use in Massachusetts. Charges for the seminars themselves are not subject to tax in Massachusetts, and on the facts you state, the portion of the flat fee representing a charge for course materials is exempt as an inconsequential element of a personal service transaction for which no separate charge is made.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers

Commissioner of Revenue

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LR 81-20