June 11, 1984

__________ ("Corporation") is developing a system for electronic transmission of facsimiles of business documents. You inquire about the application of the sales tax to the Corporation's charges to customers who use the system.

Under the system, facsimiles will be sent electronically between transmission machines via satellite and leased data lines.

Initially, the machines will be located only at business premises of the Corporation. Customers will drop off documents and pick up facsimiles at the nearest transmission office of the Corporation, or the Corporation's own couriers will pick up documents and drop off facsimiles at the business premises of the customer.

During this initial phase, the Corporation will make a base charge for each document transmitted, plus an additional charge per page if the document is longer than a stated number of pages. Where the Corporation picks up the document or delivers the facsimile, no separate charge will be made for this service, but a lower schedule of charges will apply where the Corporation does not provide this service.

In a second phase, facsimile transmission machines owned by the Corporation will be installed on the premises of customers. In some cases, facsimiles will be transmitted from one customer-premise machine to another. In other cases a customer-premise machine will be used at one end of the transaction only, and pickup or delivery may be the responsibility of the Corporation or of the sender or recipient, as the case may be. In this phase, the Corporation will make a base monthly charge for use of each customer-premise machine, plus a transaction charge. The transaction charge will vary depending upon the length of the document, whether a machine at an office of the Corporation is used, and whether the Corporation or the sender or recipient is responsible for pickup or delivery.

"Sale" is defined for sales tax purposes as including:

"(a) 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.

[and]

(f) The furnishing of information by printed, mimeographed 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. . ." G.L. c. 64H, § 1(12).

Taxable sales do not include sales of transportation or communication services, or personal service transactions which involve no sale of tangible personal property or involve sales as inconsequential elements for which no separate charges are made. G.L. c. 64H, § 1(13).

In the first phase, the Corporation will in substance be providing the service of furnishing personal information in written form. The object of its transactions with customers will not be the transfer of tangible personal property. This is also true of the second phase, except insofar as the Corporation will be renting or leasing facsimile transmission machines to its customers. Such rentals or leases fall within the definition of taxable "sales" in Chapter 64H, Section 1(12)(a), supra.

Accordingly, it is ruled that:

1. The Corporation's base charges and additional per-page charges in the initial phase will not be subject to the sales tax.

2. The Corporation's monthly charges in the second phase for use of facsimile transmission machines in Massachusetts will be subject to the sales tax.

3. The corporation's transaction charges in the second phase will not be subject to the sales tax if they are set in good faith for business reasons and not to understate the amount subject to tax.

Very truly yours,

/s/Ira A. Jackson

Commissioner of Revenue

IAJ:JXD:cm

LR 84-47