April 6, 1983

********************* ("Company") is a computer time sharing business. Some of its customers pay a monthly fee to use the Company's computer at the Company's business premises, where the computer is located. The customers give commands to the computer from Company-owned terminals. You inquire whether the Massachusetts sales tax applies to the monthly fee.

The Massachusetts sales tax is an excise on sales at retail of tangible personal property (G.L. c. 64H, § 2). "Sale" generally means any transfer of title or possession, or both, exchange, barter, lease, rental, conditional or otherwise, of tangible personal property for a consideration, in any manner or by any means whatsoever (G.L. c. 64H, § 1(12)(a)).

Subsection (2) of Sales and Use Tax Regulation 830 CMR 64H.06 ("Automatic Data Processing") provides that "[s]ales and leases of new or used ADP equipment generally are subject to tax." It further provides:

"A lease includes a contract by which a person secures for a consideration the use of equipment not on his premises, if the person or his employees, while on the premises where the equipment is located, operate the equipment or direct and control its operation."

Based on the foregoing, it is ruled that the sales tax applies to the monthly fee that the Company charges for use of its computer on the premises where the computer is located.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson
Commissioner of Revenue

IAJ:JXD:mf

LR 83-27