May 11, 1982

********** Inc. ("Company") is a New Jersey-based corporation registered as a Massachusetts vendor and engaged in the business of long-term leasing of cars, trucks and equipment. The Company collects the Massachusetts sales tax on monthly lease payments.

Under the Company's lease agreement, the lessee bears the risk of loss or damage to the vehicle. If the vehicle is destroyed during the term of the lease, the Company charges the lessee a price representing the current book value as computed under the lease agreement. Title to the vehicle passes to the lessee. You inquire whether the Company's charge for the destroyed vehicle is subject to the Massachusetts sales tax.

Massachusetts 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" is defined in Section 1(13) as "a sale of tangible personal property for any purpose other than resale in the regular course of business." "Sale" includes "[a]ny transfer of title or possession, or both,...of tangible personal property for a consideration, in any manner or by any means whatsoever" (G.L. c. 64H, s. 1(12)(a)).

Chapter 64H, Section 3(c) provides that the sales tax imposed upon motor vehicles shall be paid by the purchaser to the Registrar of Motor Vehicles. However, in Baker Transport, Inc. v. State Tax Commission, 371 Mass. 872, 360 N.E. 2d 860 (1977), the Supreme Judicial Court concluded that Chapter 64H, Section 3(c) was inapplicable to a lease transaction which involved no transfer or issuance of a motor vehicle registration because of the difficulty of collecting the tax from the lessee.

Based on the foregoing, it is ruled that the Company's charge to the lessee for a vehicle destroyed during the term of the lease is subject to the sales tax; the Company must collect and pay over the sales tax on such charge to the Commissioner of Revenue.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 82-47