May 18, 1984
You request a ruling as to the application of the Massachusetts sales tax to sales to Massachusetts subscribers of two computer information systems. You state that __________ ("Company") intends to sell subscriptions to textual information contained in a computer located out-of-state. The subscribers would access the information through telephone lines and their own equipment. Subscribers would be billed an annual subscription rate which would entitle them to a certain number of minutes of access per month. Usage over the minimum number of minutes would be separately billed.
The Company also intends to sell access to a computer containing programs capable of making economic forecasts. The programs would consist of econometric models. Subscribers would input data and receive from the computer economic forecasts based on the data. The subscribers would access the computer through telephone lines and their own equipment. The subscription price would entitle subscribers to a certain amount of access time. The computer would be located in Massachusetts.
Chapter 64H, Section 2 of the Massachusetts General Laws imposes a five percent sales tax on retail sales of tangible personal property in Massachusetts. A sale is any transfer of title or possession of tangible personal property for consideration, including a rental or lease. (G.L. c. 64H, § 1(12)(a)).
A sale is further defined as
"[t]he furnishing of information by printed, mimeoqraphed or multigraphed matter or by duplicating written or printed matter in any other manner, including the services of collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof to other persons, but excluding the furnishing of information which is personal or individual in nature and which is not or may not be substantially incorporated in reports furnished to other persons, and excluding the services of advertising or other agents, or other persons acting in a representative capacity, and information services used by newspapers, radio broadcasters and television broadcasters in the collection and dissemination of news." (G.L. c. 64H, § 1(12)(f)).
The Massachusetts Sales and Use Tax Regulation on Automatic Data Processing provides that
"[a] transaction whereby a person secures access, by means of telephone or other lines, to equipment not on his premises, is not subject to tax if the person or his employees do not operate the equipment or direct and control its operation while on the premises where the equipment is located. However, the sale or lease of a computer terminal generally is subject to tax, even if the terminal is to be used by a customer on his premises in connection with remote processing activities not themselves taxable." (830 CMR 64H.06(5)).
Based on the foregoing, it is ruled that charges for access to the Company's textual information system and charges for access to the Company's economic forecast system are not subject to the sales tax. However, any purchase, rental, or lease of equipment by subscribers in Massachusetts from the Company is subject to the sales tax.
Very truly yours,
/s/Ira A. Jackson
Commissioner of Revenue