March 28, 1985

__________ ("Company") is a Connecticut company engaged in construction and in the sale of industrial equipment and motor vehicles, including trailers and loaders which can be registered as motor vehicles. You inquire whether the Company is required to collect the Massachusetts sales tax when the Company does not know whether the purchaser will register in Massachusetts the items sold as motor vehicles. The Company is registered as a Massachusetts vendor.

Massachusetts imposes a tax of five percent upon all sales of tangible personal property in the Commonwealth. G.L. c. 64H, § 2. An out-of-state vendor's sales may be subject to the tax if the vendor has a business location in the Commonwealth, or regularly solicits orders through representatives or salesmen in the Commonwealth, or itself delivers the property sold into the Commonwealth. G.L. c. 64H, § 1(5), (13).

Generally the sales tax is added to the sales price and collected by the vendor. G.L. c. 64H, § 3(a). However, the purchaser is responsible for the sales tax imposed on sales of motor vehicles or trailers. The vendor does not collect the sales tax from the purchaser. G.L. c. 64H, § 3(c). For this purpose the term "motor vehicle" means any self-propelled vehicle designed for use and used primarily upon the highways. G.L. c. 64H, § 3(c).

The Company, then, is not required to collect from the purchaser the sales tax on sales of motor vehicles and trailers regardless of the purchaser's intent or not to register the motor vehicle or trailer in Massachusetts. However, the Company must comply with the Department of Revenue's regulation governing the taxation of motor vehicle sales within the Commonwealth. 830 CMR 64H.02. A copy of this regulation is enclosed.

If the piece of equipment sold is not a motor vehicle as defined in G.L. c. 64H, § 3(c), or a trailer, the rule is different. In this situation the Company as a registered Massachusetts vendor is responsible to collect the Massachusetts sales tax. G.L. c. 64H, § 2.

Massachusetts also imposes a tax of five percent upon the storage, use, or other consumption in the Commonwealth of tangible personal property. G.L. c. 64I, § 2. The use tax is imposed upon all tangible personal property, including motor vehicles, purchased out-of-state from vendors who are not engaged in business within Massachusetts, if the property is brought into Massachusetts to be used in Massachusetts. The use tax imposed upon motor vehicles and trailers is paid by the purchaser directly to the Massachusetts Registrar of Motor Vehicles at the time of registration. G.L. c. 64I, § 1. If the motor vehicle or trailer is not registered the use tax is paid by the purchaser directly to the Massachusetts Department of Revenue. G.L. c. 64I, § 2.

To assist your Massachusetts customers in complying with the Massachusetts sales and use tax law, I have enclosed a supply of Sales Tax Payment Forms for Motor Vehicles (Form ST-7R). You should instruct your customers to complete this form and send it, along with payment for any use tax due, to this office if the items purchased from you are intended for use in Massachusetts without registration as motor vehicles.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue

IAJ:JSO:mf

Enclosures

LR 85-43