April 30, 1982
You inquire whether dividends from the ********** ("Fund") are subject to Massachusetts income tax.
The Fund is a no-load open-end investment company (mutual fund) established as a Massachusetts business trust. It has qualified and intends to continue to qualify as a regulated investment company under Section 851 of the Internal Revenue Code.
The Fund invests in short-term obligations of the United States government, its agencies and its instrumentalities. The Fund's net interest income is declared as dividends daily. For federal income tax purposes the dividends are taxable to shareholders as ordinary income.
General Laws Chapter 62, Section 8(b) states in part that a corporate trust which is a regulated investment company under Section 851 of the Code is not subject to taxation under Chapter 62. Section 8(c) of Chapter 62 provides that dividends received from a corporate trust which is not subject to taxation are taxable.
Non-residents of Massachusetts are subject to Massachusetts income taxation on their Massachusetts gross income which is
"...gross income derived from or effectively connected with any trade or business, including employment carried on by the taxpayer in the commonwealth or derived from the ownership of any interest in real or tangible personal property located in the commonwealth".
Based on the foregoing it is ruled that:
1. Dividends payable to Massachusetts residents from the [Fund] ********** are subject to Massachusetts income taxation as dividends at the rate of 10% plus surtax.
2. Dividends payable to nonresidents are not subject to Massachusetts income taxation.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue