June 8, 1982
********** Corporation ("Company") is a ********** -based corporation that proposes to sell computerized telephone systems for use in Massachusetts. You inquire whether the charges the Company will impose in connection with such sales will be subject to the Massachusetts sales or use tax. The charges will include amounts representing the cost of installing the systems.
The systems to be sold comprise a computer and related telephone equipment and coaxial telephone cable. The computer and equipment are readily movable. The cable is partly installed within the walls of a customer's business premises and therefore can only be removed with difficulty, but, because of its high cost, it is usually removed when a customer relocates.
The Massachusetts sales tax is an excise on sales at retail of tangible personal property in Massachusetts (G.L. c. 64H, s. 2). The complementary use tax applies to the storage, use or other consumption in Massachusetts of tangible personal property purchased for storage, use or other consumption in Massachusetts (G.L. c. 64I, s. 2). Sales of real property are not subject to the sales or use tax.
Section 6(i) of Chapter 64H provides that the following are exempt from tax:
"[t]he sales, furnishing or service of gas, water, electricity, steam, telephone and telegraph."
This exemption does not apply to sales of telephone equipment. Chayet v. Commissioner of Corporations and Taxation, 367 Mass. 908 (1975).
The sales price on which the sales and use taxes are based does not include the amount charged for labor or services rendered in installing or applying property sold (G.L. c. 64H, s. 1(14)(c)(iii)).
Based on the foregoing, it is ruled that the Company must collect and pay over the sales or use tax on its sales of the telephone systems (including coaxial telephone cable) sold in Massachusetts or sold outside Massachusetts for use in Massachusetts. The sales price of a system does not include separately-stated installation charges set in good faith.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue