August 14, 1984

You request a ruling regarding the application of the sales tax to the rental of portable toilets by your client ("Client"). The Client places the toilets at requested locations and periodically picks up the waste under rental and service agreements.

1. Chapter 64H, Section 2 of the Massachusetts General Laws imposes a five percent sales tax on retail sales of tangible personal property. The definition of "sale" includes a lease or rental. (G.L. c. 64H, 5 1(12)(a)).

Section 6(ii) of Chapter 64H exempts from the sales tax "[r]ental receipts or charges in connection with service contracts by and between waste service firms and customers for the use, maintenance and repair of refuse containers or bins placed on customers' premises by waste service firms."

Portable toilets under a rental and service agreement are not rented out primarily for the containment of waste or refuse as are "refuse containers or bins." The primary function of a portable toilet is to facilitate the elimination of human waste, rather than to contain human waste. Therefore, the rental of portable toilets is not included within the exemption of Chapter 64H, Section 6(ii) and is subject to the sales tax.

2. Section 1 (13) (c,) of Chapter 64H excludes from the definition of retail sale personal service transactions which involve no transfer of tangible personal property for consideration or which involve transfers of tangible personal property for consideration as inconsequential elements for which no separate charge is made. The rental of portable toilets under rental and service agreements is a transaction in which the transfer of tangible personal property is a significant element of the entire transaction and is not a service transaction within the meaning of Chapter 64H, Section 1(13)(c). But the periodic cleaning of and pick-up of waste from portable toilets is also a significant element of the transaction.

The Massachusetts Supreme Judicial Court in Browning-Ferris Industries, Inc. v. State Tax Commission held that if services and tangible personal property are both provided as consequential elements of the same transaction and are billed separately, the charges for the tangible personal property are subject to the sales tax, but the charges for the services are not subject to the sales tax. (See 375 Mass. 326, 328-31 (1978)).

Therefore, the charges for cleaning and pick-up set in good faith by the Client are not subject to the sales tax if such services are separately stated in the rental and service agreements.

Very truly yours,

Commissioner of Revenue

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LR 84-59