September 7, 1982

Corporation A sells tangible personal property to Corporation B which is located in Minnesota. Corporation B takes possession of the property in Minnesota and stores it in a warehouse in Minnesota. Subsequently, the property is shipped to Corporation B's retail stores located in Massachusetts. You inquire whether Massachusetts allows a use tax credit for sales or use tax, if any, paid to Minnesota

You also ask whether purchases of tangible personal property which is stored in Massachusetts and transported to Minnesota for use in Minnesota are exempt from the Massachusetts sales and use taxes.

Massachusetts General Laws 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 at the rate of five per cent. Under Chapter 64I, Section 1(5), "storage" and "use" does not include the keeping, retaining, or exercising any right or power over tangible personal property for the purpose of subsequently transporting it outside the Commonwealth for use thereafter solely outside the Commonwealth.

Chapter 64I, Section 7(c) exempts from the use tax:

"[s]ales upon which the purchaser has paid a tax or made reimbursement therefor to a vendor or retailer under the laws of any state or territory of the United States, provided that such tax was legally due without any right to a refund or credit thereof and that such other state or territory allows a corresponding exemption with respect to the sale or use of tangible personal property upon which such a sales or use tax was paid to this state. To the extent that the tax imposed by this chapter is at a higher rate than the rate of tax in the first taxing jurisdiction, this exemption shall be inapplicable and the tax imposed by this chapter shall apply to the extent of the difference in such rates."

Minnesota Statutes, Section 297A.24 provides a credit against the Minnesota use tax for sales or use tax paid to another state with respect to tangible personal property.

Section 297A.02 of the Minnesota Statutes imposes an excise on the gross receipts from sales at retail made after June 30, 1981 and before July 1, 1983 at the rate of five per cent.

General Laws Chapter 64H, Section 2 imposes an excise upon sales at retail of tangible personal property in the Commonwealth by any vendor at the rate of five per cent.

Based on the foregoing, it is ruled that:

1. Tangible personal property purchased by Corporation B, which is stored in Minnesota and transported to Massachusetts for use at its retail stores located there and upon which Corporation B has paid a five per cent sales or use tax to Minnesota, is exempt from the Massachusetts use tax provided that the tax was legally due without any right to a refund or credit. If Corporation B has paid a sales or use tax on such property to a vendor under the laws of any other state, the property is exempt from the Massachusetts use tax, provided that the tax was legally due without any right to a refund or credit and such other state allows a corresponding exemption for the sale or use of tangible personal property upon which a tax was paid to Massachusetts. However, to the extent that the rate of tax imposed by Massachusetts is higher than the rate of tax in the other state, this exemption is inapplicable and the Massachusetts use tax applies to the extent of the difference in rates.

2. Tangible personal property purchased by Corporation B, which is stored in Minnesota and transported to Massachusetts for use at its retail stores located there, and upon which Corporation B has not paid a sales or use tax to Minnesota or to any other state is subject to the Massachusetts use tax.

3. Tangible personal property purchased by Corporation B from a vendor located in Massachusetts, which is stored by Corporation B in Massachusetts for the purpose of subsequently transporting it to Minnesota for use there, is subject to the Massachusetts sales tax.

4. Tangible personal property purchased by Corporation B from a vendor located outside of Massachusetts, which is stored in Massachusetts for the purpose of subsequently transporting it to Minnesota for use solely outside Massachusetts, is exempt from the Massachusetts sales and use tax.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 82-84