July 14, 1983

__________ ("Company") is a contractor whose business consists of clearing land of debris and selling cement and concrete, sand, stone, gravel, loam and fill. You ask how the sales tax applies to the Company's activities in the situations described below.

1. A customer places an order with the Company for a load of sand, stone, gravel, loam or fill. The Company trucks the material to the customer's premises. On its bill to the customer, the Company sets forth a separate charge for the trucking. It is assumed for purposes of this ruling that this separate charge is set in good faith.

The sales price of tangible personal property on which the sales tax is based generally is the total amount charged by the vendor (G.L. c. 64H, § 1(14)). However, separately-stated charges for transportation of property that takes place after its sale are excluded from the sales price (G.L. c. 64H, § 1(14)(c)(v)).

Based on the foregoing, it is ruled that the Company's charge for the material is subject to the sales tax, but its separately-stated charge for trucking the material is not subject to tax if it is set in good faith.

2. A customer places an order with the Company for a certain number of yards of cement. The Company bills the customer at a fixed rate per yard of cement.

It is ruled that the Company's charge for the cement is subject to the sales tax.

3. The Company provides materials or heavy equipment for work undertaken for the federal government, the Commonwealth of Massachusetts, or a municipality.

General Laws Chapter 64H, Section 6(d) provides an exemption from the sales tax for sales to the United States, the Commonwealth or any political subdivision thereof, or their respective agencies.

General Laws Chapter 64H, Section 6(f) exempts from tax sales of building materials and supplies to be used in the construction, reconstruction, alteration, remodeling or repair of any building, structure, public highway, bridge or other public work owned by or held in trust for the benefit of the United States, the Commonwealth of Massachusetts or any political subdivision thereof, or their respective agencies, and used exclusively for public purposes, so long as the governmental body or agency has first obtained a certificate from the Commissioner stating that it is entitled to such exemption (Form ST-2) and the vendor keeps a record for each sale describing the item or items sold and setting forth the sales price for each item, the name and address of the purchaser, the date of the sale, and the number of the certificate of exemption ( see Division 8(f) of the Department of Revenue's Record Retention Regulation (830 CMR 62C.24)). "Building materials and supplies" is defined in Section 6(f) as including "all materials and supplies consumed, employed or expended in the construction, reconstruction, alteration, remodeling or repair [of the public work], as well as such materials and supplies physically incorporated therein." It also includes rental charges for construction vehicles, equipment and machinery rented specifically for use on the site of a tax exempt project or while being used exclusively for the transportation of materials for any tax exempt project.

Accordingly, sales directly to the United States, the Commonwealth or any of its political subdivisions or to their agencies are exempt, as are sales coming within Section 6(f), supra. Other sales or leases of tangible personal property for use in government projects are subject to the sales tax.

4. The Company uses heavy equipment to clear land of debris for a customer. You state that the Company's employees are not directed or controlled in the work by the customer. In some cases the Company charges at an hourly rate; in others, it establishes a contract price before the work is done.

"Sale" is defined for sales tax purposes as including 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)). Personal service transactions which involve no sale of tangible personal property are not subject to the sales tax (G.L. c. 64H, § 1(13)(c)).

Based on the foregoing, it is ruled that the Company's charges for clearing land of debris are not subject to the sales tax where the customer does not direct or control the Company's employees in the operation of the equipment. However, where the Company charges its customer on an hourly or other periodic basis, it will be presumed that the transaction is a taxable lease or rental of equipment. To overcome this presumption, the Company must maintain records sufficient to establish that the equipment used was not under the control or direction of the customer.

5. The Company agrees to clear land of debris for a customer, using a loader and a truck. You state that the customer directs and controls the Company's employees in the operation of the loader but not the truck, which is used to haul off the debris. The Company bills the customer separately, at hourly rates, for the trucking, the loader, and the loader operator's labor. It is assumed that these separate charges are set in good faith.

Based on the authorities cited in Question (4), it is ruled that the Company's charge for the loader is subject to tax as a lease or rental of equipment; the Company's charge for the loader operator's labor is not subject to tax if it is set in good faith.

The Company's charge for the trucking is not subject to tax if the customer does not director or control the Company's employees in the operation of the truck. However, since the Company charges its customer for the trucking on an hourly basis, it will be presumed that the transaction is a taxable lease or rental of the truck. To overcome this presumption, the Company must maintain records sufficient to establish that the truck was not under the control or direction of the customer.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson
Commissioner of Revenue

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LR 83-62