March 12, 1981
********** ("Company") is a Massachusetts landscape architecture and site planning firm. Its clients include the federal government and municipalities within and without the Commonwealth. In the course of its work under contracts with such clients, the Company purchases and consumes film, photographic supplies, printed materials and other items of tangible personal property; it bills the clients at cost for these items.
You inquire whether the Company must pay Massachusetts sales and use taxes on such purchases.
It is assumed that the purchases in question either take place in Massachusetts or are for storage, use or other consumption in Massachusetts.
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:
(1) the Company's purchases of items to be used in the performance of contracts with municipalities outside Massachusetts are subject to tax; and
(2) the Company's purchases of items to be used in the performance of contracts with the federal government and municipalities within Massachusetts are taxable unless, under the purchase agreements and in practice, title to, responsibility for payment for, and control over the items will vest in the United States or a Massachusetts municipality, or their respective agencies as defined above.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue
LJH:JXD:mf
LR 81-23