September 17, 1981

You inquire about the application of the Massachusetts sales and use taxes to sales by ********** ("Company"), a Minnesota-based manufacturer registered as a Massachusetts vendor. The Company sells tangible personal property to retailers that are engaged in business in Massachusetts within the meaning of Massachusetts General Laws Chapter 64H, Section 1(5); the retailers may or may not be located in Massachusetts. The Company ships the items by common carrier, F.O.B. Minneapolis, directly to the retailers' customers within and without Massachusetts; the retailers themselves do not take possession of the items sold.

General Laws Chapter 64H, Section 2 imposes an excise on sales at retail of tangible personal property in Massachusetts by any vendor; "sale at retail" does not include sales for resale in the regular course of business (G.L. c. 64H, s. 1(13)).

Chapter 64I, Section 2 imposes an excise on the storage, use or other consumption in Massachusetts of tangible personal property purchased from any vendor for storage, use or other consumption in Massachusetts; "storage, use or other consumption" does not include the sale of tangible personal property in the regular course of business or the retention of tangible personal property for sale in the regular course of business (G.L. c. 64I, s. 1(4), (5)).

Except where a seller takes a resale certificate in good faith from a purchaser who is a registered Massachusetts vendor, it is presumed that all gross receipts of a vendor from Massachusetts sales are from sales subject to tax (G.L. c. 64H, s. 8), and it is presumed that tangible personal property sold by any person for delivery in Massachusetts is sold for storage, use or other consumption in Massachusetts (G.L. c. 64I, s. 8).

Based on the foregoing, it is ruled that:

(1) Where the Company sells tangible personal property to retailers, and ships the items to the retailers' customers in Massachusetts, the sales to the retailers are subject to tax, except where the retailer has registered as a Massachusetts vendor and presents a Massachusetts resale certificate in connection with the sale. The retailers must collect and pay over tax on sales of items to their customers in Massachusetts.

(2) Where items are shipped by the Company from Minnesota to out-of-state customers of a retailer located in Massachusetts, and the goods never enter Massachusetts, neither the sale by the Company to the retailer nor the sale by the retailer to its customer is subject to Massachusetts tax.

Very truly yours

/s/L. Joyce Hampers

L. Joyce hampers
Commissioner of Revenue

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LR 81-85