January 4, 1982
*********** ("Manufacturer") is a Minnesota-based corporation registered as a Massachusetts vendor and engaged in the manufacture and sale of microwave ovens. The Manufacturer sells ovens to Company A, which sells them in turn to Company B for use in Massachusetts. The Manufacturer ships the ovens from out of state directly to Company B in Massachusetts. Company A is not registered as a Massachusetts vendor.
You inquire whether the Manufacturer may accept an out-of-state resale certificate from Company A in lieu of collecting and paying over Massachusetts sales or use tax on its sale of the ovens to Company A.
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 Massachusetts resale certificate in good faith from a purchaser who is a registered Massachusetts vendor, two presumptions arise: 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).
Section 1(13) of Chapter 64H provides:
"The delivery in the commonwealth of tangible personal property by an owner or former owner thereof, or by a factor, or agent of such owner, former owner or factor, if the delivery is to a consumer or to a person for redelivery to a consumer, pursuant to a retail sale made by a retailer not engaged in business in the commonwealth, is a retail sale in the commonwealth by the person making the delivery. He shall include the retail selling price of the property in his gross receipts."
Based on the foregoing, it is ruled that:
1. If Company A is engaged in business in Massachusetts within the meaning of Chapter 64H, Section 1(5), it must register as a Massachusetts vendor and collect and pay over sales or use tax, based on its selling price, on the sale of the ovens to Company B; in such case Company A may give the Manufacturer a Massachusetts resale certificate in lieu of paying a tax on its purchase from the Manufacturer.
2. If Company A is not engaged in business in Massachusetts within the meaning of Chapter 64H, Section 1(5), the Manufacturer must collect and pay over sales or use tax on the sale of the ovens, based on the retail selling price to Company B.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue