February 21, 1985

You request a ruling regarding the application of the Massachusetts sales and use taxes to sales of water softeners by __________ ("Company"). It is assumed for purposes of this ruling that your Company sells the water softeners in Massachusetts. You ask whether the water softeners should be treated as real property because they are affixed to the customers' homes, or whether they are treated as tangible personal property.

Massachusetts General Laws Chapter 64H, Section 2 imposes a five percent sales tax on all retail sales of tangible personal property in Massachusetts, unless otherwise exempted. Chapter 64I, Section 2 imposes a complementary five percent use tax on the storage, use, or other consumption in Massachusetts of tangible personal property purchased for storage, use, or other consumption in Massachusetts. The use tax does not apply to sales upon which the sales tax has already been collected under Chapter 64H. (G.L. c. 64I, § 7(a)).

At the time of sale, the Company's water softeners are tangible personal property. The subsequent installation in a residence or other structure of real property does not change its character as tangible personal property. Therefore, sales of the Company's water softener in Massachusetts are subject to the sales tax.

In determining the sales price on which the tax is based, General Laws Chapter 64H, Section 1(14)(a)(ii) provides that "no deduction shall be taken on account of … the cost of materials used, labor or service cost, … or other expenses." Chapter 64H, Section 1(14)(c)(iii) excludes from the sales price any amount charged by the vendor for labor or services rendered in installing or applying the property sold.

Therefore, the total amount paid as consideration for the water softener to the Company is subject to the sales tax. If the Company makes a separate charge for installation, this amount is not subject to the sales tax.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue

LR 85-25