You ask whether operators of hotels, motels, and lodging houses located in the Commonwealth are required to collect the state and local room occupancy excises imposed by G. L. c. 64G when rooms are rented to the Department of Public Welfare (DPW) under the Commonwealth's Emergency Assistance Program. G.L. c. 18, §2(D). Under the Emergency Assistance Program the DPW provides temporary shelter for certain needy families for periods not to exceed 90 days. G.L. c. 18, §2(D); 106 CMR 309.040(B)(5)(d). Once an eligible recipient is identified, the DPW arranges for specific services for that client in a hotel or motel. After the hotel or motel operator provides the authorized services to the client and submits the appropriate claim form, the DPW makes payment to the operator for services performed.
For the following reasons, we conclude that operators of hotels, motels and lodging houses located in the Commonwealth are required to collect the state and local room occupancy excises imposed by G.L. c. 64G upon the rental of rooms to the DPW or its clients under the Emergency Assistance Program. For the purposes of this ruling we assume without deciding that the DPW rents the rooms.
1. The DPW is an "occupant," as that term is defined in G.L. c.64G, §1(f), from whom the operator must collect the room occupancy excises.
General Laws Chapter 64G, Section 1(f), defines "occupant" as a person who, for a consideration, uses, possesses or has a right to use or possess any room or rooms under any lease, concession, permit, right of access, license or agreement (emphasis added). The word "person," for room occupancy excise purposes, "includes an individual, partnership, trust or association with or without transferable shares, joint stock company, corporation, society, club, organization, institution, estate, receiver, trustee, assignee, or referee, and any other person acting in a fiduciary or representative capacity, whether appointed by a court or otherwise, or any combination of individuals acting as a unit." G.L. c. 64G, §1(g).
Although general words in a statute such as are not ordinarily construed to include the Commonwealth or its political subdivisions, in some situations the meaning of such general words has been interpreted more broadly to include governmental agencies. Nardone v. United States, 302 U.S. 379,383-84 (1937) (federal officers are "persons" within the meaning of the Communications Act of 1934); Attorney General v. Woburn, 322 Mass. 634,637 (1948) ("whoever, which has the same definition as "person" under G.L. c. 4, §7, Twenty-third, includes municipalities, at least as to certain provisions of St. 1911, c. 291); See also, Town of Hadley v. Department of Revenue, ATB Docket No. 99814 (3/10/81) (the Town of Hadley was a "person" for purposes of the excise on special fuels imposed by G.L. c. 64E.) While these decisions standing alone may not compel the conclusion that the DPW is a "person" subject to taxation under G.L. c. 64G, they do support the proposition that government agencies can be "person(s)" within the meaning of Chapter 64G, even though government agencies are not expressly mentioned in the wording of that statute.
This position receives further support in other language used in the room occupancy excise statute, particularly in comparison with corresponding language in the sales tax statute, G.L. c. 64H. The word "person" is defined differently in each statute. Under the sales tax "person" is defined as "an individual, partnership, trust, association, etc...." G.L. c. 64H, §1(7). Under the room occupancy excises "person includes an individual, partnership, trust, association, etc .... G.L. c. 64G, §(g) (emphasis added). This slight difference in the language is significant. It suggests that, unlike its use in the sales tax, the use of "person" in the room occupancy statute is not intended to be limited only to those particular entities listed in the definition. See, e.g., Pacific Indemnity Co. v. Interstate Fire and Casualty Co., 488 A. 2d. 486 (Md. 1985); People v. Western Airlines, Inc. 268 P. 2d. 723 (Cal. 1985).
Even more significantly, the sales tax statute contains an express provision under which sales to Massachusetts agencies are excluded from taxation. G.L. c. 64H, §6(d). Sales to state agencies are exempt from the tax not because state agencies fall outside the definition of "person" under G.L. c. 64H, §1(7), but rather because the Legislature enacted an exemption specifically directed at "the commonwealth ... its subdivisions ... and agencies ...." G.L. c. 64H, §6(d). There is no corresponding exemption in the room occupancy statute, and it is reasonable to assume that the more inclusive definition of "person" in the room occupancy excises, coupled with the absence of an exemption in that statute for government agencies, reflects a deliberate legislative intent to bring government agencies within the scope of the statute. This conclusion seems inescapable when one considers that both statutes were a part of the same tax legislation originally enacted by the General Court in 1966. (The sales tax originated as a temporary act in St. 1966, c. 14, §1; and the room occupancy excise was enacted by St. 1966, c. 14, §25.)
In view of the conclusion that the DPW is a "person" within the meaning of G.L. c. 64G, §(1)(g), it follows that the DPW is an "occupant" under the definition of that term in G.L. c. 64G, §1(f). Unless otherwise exempt, the DPW is obligated to reimburse the operator of the hotel, motel or lodging house for the tax. G.L. c. 64G, §4.
2. General Laws Chapter 64G does not provide an exclusion for the rental of rooms in a hotel, motel, or lodging house by the DPW for its clients under the Commonwealth's Emergency Assistance Program.
There are five specific exclusions from the room occupancy excises in G.L. c. 64G, §2. From the plain language of Section 2 it is clear that none of these exclusions applies to the transfer of occupancy, to DPW or its clients, of a room in an ordinary hotel, motel, or lodging house. A public hotel, motel or lodging house is simply not a lodging accommodation at a "... state ... institution" (G.L. c. 64G, §2(a)) or at a "religious, charitable, educational or philanthropic institution" (G.L. c. 64G, §2(b)). Similarly, a public hotel, motel, or lodging house is neither a "private convalescent home" (G.L. c. 64G, §2(c)) nor a religious or charitable home (G.L. c. 64G, §2(d)) for the aged, infirm, indigent or chronically ill. Finally, a hotel, motel or lodging is obviously not a "summer camp for children ...." (G.L. c. 64G, §2(e)). It must be presumed that in excluding only these particular types of entities from the room occupancy excises, the Legislature intended to impose the tax on those organizations or entities not enumerated. See, Supreme Council of the Royal Arcanum v. State Tax Commission, 353 Mass. 111, 114 (1970).
Moreover, as the Supreme Judicial Court has stated, an exemption from taxation is a privilege, and will not be recognized unless it is shown that the exemption is conferred either by the express words or by the necessary implication of the statute. First Agricultural National Bank v. State Tax Commission, 353 Mass. 172 (1967), rev'd on other grounds, 392 U.S. 339 (1968). See, e. g., Town of Milton v. Ladd, 348 Mass. 762 (1965) (a statute granting exemption from taxation must be strictly construed). In the sales tax area the Court has said that if the exemption is explicitly defined and restricted, it cannot be revised. S.J. Groves & Sons Co. v. State Tax Commission, 372 Mass. 140, 145 (1977).
The exclusions set out in G.L. c. 64G, §2, are not uncertain or vague. Cf. Ace Heating Service, Inc. v. State Tax Commission, 371 Mass. 254, 255 (1976); (uncertain sales tax exemption need not be interpreted narrowly); Courier Citizen Co. v. Commission of Corporations and Taxation, 358 Mass. 563, 569 (1971) (ambiguous exemption does not require special burden of proof by a taxpayer). To the contrary, they are explicitly defined and restricted. See, S.J. Groves and Sons, Co., supra. They do not reach and may not be stretched to reach the rental of rooms in a hotel, motel or lodging house by the DPW for its clients under the Commonwealth's Emergency Assistance Program.
3. Neither the taxing provision (Pt. 2, C. 1, §1, Art. 4) nor the separation of powers provision (Pt. 1, Art. 30) of the Massachusetts Constitution exempts the Department from the room occupancy excises.
Massachusetts courts have consistently stated the general rule that state tax legislation is entitled to the benefit of every constitutional doubt. Andover Savings Bank v. Commissioner of Revenue, 387 Mass. 229, 235 (1982). ("In addressing a constitutional challenge to a tax the tax is endowed with a presumption of validity and is not void unless its invalidity is established beyond a rational doubts) See also, Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 527 (1921). The authority to tax is a fundamental power of the legislative branch, explicitly vested in the General Court by Pt. 2, C. 1, §1, Art. 4 of the Constitution. This provision is a broad grant of authority to the Legislature, rather than a limitation on the Legislature's powers. 2 OP Ag 161, (1900)). Although the Supreme Judicial Court has never ruled on the issue, other courts have held that this provision of the Constitution does not prohibit the Commonwealth from subjecting its own agencies and subdivisions to taxation. See, Massachusetts Turnpike Authority v. Metaxas, Suffolk Superior Ct., Equity No. 98079 (1/9/75); (gasoline and special fuels excises); Town of Hadley v. Department of Revenue, ATB No. 99814 (3/10/81) (special fuels excise). In addition, we find no specific authority for the proposition that the Massachusetts Constitution demands a blanket exemption from taxation owing to all Massachusetts government agencies.
However, even it the Massachusetts Constitution did not permit the General Court to impose a tax directly on the DPW, the Commissioner of Revenue would nevertheless not be excused from collecting the room occupancy excises under the circumstances which are described here. This is because the room occupancy excises imposed by G.L. c. 64G are imposed only upon operators of hotels, motels,.and lodging houses. The statute does not tax occupants. Under Massachusetts law the legal incidence of a tax is upon the party ultimately responsible to the taxing authority. Supreme Council of the Royal Arcanum, supra, 358 Mass. 111, at 113; First Agricultural National Bank v. State Tax Commissioner, supra, 353 Mass. at 177. 1
In the case of the room occupancy excises, the responsible party is the operator. G.L. c. 64G, §3. The operator is required to make the return. G.L. c. 62C, §16(g). The assessment and collection through criminal and civil remedies may be made only against the operator. G.L. c. 64G, §7B. The tax abatement procedures are applicable only to operators. G.L. c. 64G, §7A. Finally, there is no provision permitting the Commonwealth to enforce payment of the excises against an occupant; and, as long as the operator pays the excises to the Commonwealth, there are no sanctions imposed if the operator chooses not to charge the room occupancy excises to an occupant.
Under the principles discussed in First Agricultural National Bank, the excises imposed by Chapter 64G are taxes upon the operators of the hotels, motels and logging houses with which DPW or its clients contracts. They are not imposed upon the DPW. Since these taxes fall on the operators, the Constitution is not offended even if the economic burden of payment may be passed on to the DPW. First Agricultural National Bank supra, at 177.
Finally, requiring operators of hotels, motels and lodging houses to collect the room occupancy excises upon the rental of rooms to the DPW under the Emergency Assistance Program does not violate the separation of powers provision found in Article 30 of the Declaration of Rights of the Constitution of Massachusetts. The Supreme Judicial Court has recognized that separation of powers does not require "watertight compartments" within the government, and that one branch may assume certain functions which do not "unduly restrict" the endeavors of another branch. Opinion of the Justices, 372 Mass. 883, 892 (1977). The collection of taxes under these circumstances does not "unduly restrict" the functions of the executive branch of the Commonwealth.
In arriving at our decision in this matter, we are not unmindful of the DPW's responsibilities under the Emergency Assistance Program, nor do we view lightly your concerns about a system of taxation in which private and public entities are required to share equally in the costs of state government. On the other hand, whatever the benefits of an administrative decision excusing the DPW from the excises imposed by Chapter 64G, the Commissioner of Revenue lacks authority to make such a decision.
Very truly yours
Ira A. Jackson
Commissioner of Revenue
May 8, 1986
1 In First Agricultural National Bank the Supreme Judicial Court ruled that a national bank could not avail itself of an exemption from sales tax which was based in part upon the United States Constitution because the bank was a "purchaser" under G.L. c. 64H, and because the legal incidence of our sales tax is on the "vendor" rather than the "purchaser." 353 Mass. 180-181. The Court reasoned that the United States Constitution provides federal immunity from taxation only where the legal incidence of the tax falls upon the party claiming the constitutional immunity. 353 Mass. 177-180. Since the Court held that the ultimate responsibility for the sales tax was the vendor's and not the purchaser's, the Court denied the exemption to the bank. The United States Supreme Court reversed the Supreme Judicial Court and held that incidence of the Massachusetts sales tax was on the purchaser not the vendor. 392 U.S. at 348. However, the U.S. Supreme Court deliberately limited its opinion to questions which have an impact on federal immunity. Thus, by its own terms, the reversing decision does not purport to address or resolve state constitutional issues. As to such matters the Supreme Judicial Court is the final authority in Massachusetts. The reasoning and the rule of the Supreme Judicial Court in First Agricultural National Bank are still the law of this Commonwealth. Supreme Council of the Royal Arcanum, supra, ("we see no reason however, for changing our conclusion [in First Agricultural National Bank] on the incidence of the sales tax in a situation where federal immunity... is not involved.") 358 Mass. at 113.(1)
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