March 23, 1983
You represent a New York corporation ("Auctioneer") engaged in the business of conducting auction sales of furniture, jewelry and fine art. You inquire whether the Auctioneer must register as a Massachusetts vendor and pay the Massachusetts use tax with respect to its sales of tangible personal property in New York for use in Massachusetts.
The Auctioneer's principal place of business is in New York. It now has no contacts with Massachusetts, but it intends to engage a representative ("Representative") to seek out persons in Massachusetts who own items that they wish to have sold in New York by the Auctioneer. The Representative will not solicit persons to purchase items at the Auctioneer's sales.
The Representative will work out of his home in Massachusetts. He will be paid an annual retainer of $20,000, plus a commission of up to two per cent on items introduced to the Auctioneer by the Representative, with the first $10,000 of the commission to be applied against the retainer.
The Representative is expected to devote about half of his working hours to his duties as the Auctioneer's representative. You state that he will receive "assistance" from the Auctioneer and work with employees and representatives of the Auctioneer from time to time, but that he will not be subject to the Auctioneer's day-to-day supervision. You further state that the Representative will be treated as an independent contractor for federal income tax purposes.
It is expected that the Representative will be listed in the Auctioneer's catalogs, the Boston telephone directory, and occasionally in newspaper or magazine advertisements, as the Auctioneer's representative.
Massachusetts purchasers of items at the Auctioneer's sales will either take possession of the items purchased in New York, or instruct the Auctioneer to have them delivered in Massachusetts. In the latter case, the items will be delivered from New York to Massachusetts by common carrier.
Every vendor engaged in business in Massachusetts must register and pay use taxes with respect to its retail sales of tangible personal property outside Massachusetts for use in Massachusetts (G.L. c. 64I, §§ 2, 4, 9).
General Laws Chapter 64H, Section 1(5) defines "engaged in business in Massachusetts" as follows:
"having a business location in the commonwealth; regularly soliciting orders for the sale of tangible personal property by salesmen, solicitors, or representatives in the commonwealth, unless such activity consists solely of solicitation by direct mail or advertising via newspapers, radio or television; or regularly engaging in the delivery of property in the commonwealth other than by common carrier or United States mail. A person shall be considered to have a business location in the commonwealth only if such person (a) owns or leases real property within the commonwealth; (b) has one or more employees located in the commonwealth; (c) regularly maintains a stock of tangible personal property in the commonwealth for sale in the ordinary course of business; or (d) regularly leases out tangible personal property for use in the commonwealth. For the purposes of this paragraph....an employee shall be considered to be located in the commonwealth (a) if his service is performed entirely within the commonwealth; or (b) if his service is performed both within and without the commonwealth, but in the performance of his service he regularly commences his activities at, and returns to, a place within the commonwealth."
Generally, an individual is regarded as an employee, as distinguished from an independent contractor, if the person for whom his services are performed has the right to control and direct the individual both as to the result to be accomplished by the work and as to the details and means by which that result is accomplished. The employer does not have to actually direct the manner in which the services are performed so long as he has a right to do so. Silvia v. Woodhouse, 356 Mass. 119 (1969); Marino v. Trawler Emil C, Inc., 350 Mass. 88, cert. denied 384 U.S. 960 (1966); U.S. Treas. Reg. 31.3401(c) -1(b).
Based on the foregoing, it is ruled that if the Representative is an independent contractor and not an employee of the Auctioneer, the activities of the Representative alone will not require the Auctioneer to register as a Massachusetts vendor or subject the Auctioneer to the Massachusetts use tax. Of course, the use tax must be paid by persons who purchase tangible personal property from the Auctioneer for use in Massachusetts.
Very truly yours,
/s/Ira A. Jackson
Ira A. Jackson
Commissioner of Revenue