November 7, 1989

You have requested a ruling on the sales tax consequences to ("Company") of mailing its product, cardboard mailing tubes, to recipients out of state designated by the non-Massachusetts purchaser. For the reasons stated below, we conclude that such sales are exempt from the sales tax under Chapter 64H of the General Laws.

Facts

You represent the relevant facts as follows. The Company, a Massachusetts corporation, manufactures in Massachusetts cardboard mailing tubes. One of the Company's customers ("Customer"), located out of state, manufactures graphic posters. The Customer buys tubes from the Company in which to mail the Customer's posters to the purchasers of the posters.

The Company and the Customer propose to do business as follows. The Customer will ship its posters to the Company in Massachusetts. The Company will place the posters in the mailing tubes it manufactures, will glue onto each tube a mailing label supplied by the Customer with the Customer's logo and address and the designated recipient's name and address already printed on it, and will mail the tubes through the U.S. Postal Service to the recipients designated by the Customer. Most of the Customer's designated recipients will be outside of Massachusetts. The Company concedes that the Company will be responsible for collecting and paying over sales tax on the sale of tubes if the designated recipients are located in Massachusetts.

Discussion

The question presented is whether the sale of mailing tubes by the Company to the Customer under the circumstances outlined above is subject to the sales tax under Chapter 64H of the General Laws. Massachusetts imposes an excise upon sales at retail of tangible personal property in the Commonwealth by any vendor. G.L. c. 64H, § 2. The term sale includes any transfer of title to or possession of, or both, of tangible personal property for consideration. G.L. c. 64H, § 1(12)(a). The Company's transfer of mailing tubes to the Customer is a retail sale of tangible personal property subject to tax unless specifically exempted by statute.
Section 6(b)(2) of Chapter 64H provides an exemption for "[s]ales of tangible personal property.....which the vendor is obligated under the terms of any agreement to deliver.....to an interstate carrier for delivery to a purchaser outside the commonwealth or to a designee outside the commonwealth of a purchaser outside the commonwealth." The Company's sales are exempt under section 6(b)(2) only if the United States Postal Service is an "interstate carrier" within the meaning of that section. The Department has ruled on other occasions that mailing a product out of state to an out-of-state purchaser is exempt under section 6(b), thereby including the Postal Service within the definition of "interstate carrier." See Letter Ruling 81-97, 84-67. We conclude that sales by the Company to the Customer of tubes that the Company mails to the purchasers of posters who are the Customer's designees outside the Commonwealth are exempt from the sales tax under G.L. c. 64H, § 6(b)(2).

Section 6(ff) of Chapter 64H provides an exemption for

[s]ales of printed material which is manufactured in the Commonwealth to the special order of a purchaser, to the extent such material is delivered to an interstate carrier, a mailing house or a United States Post Office for delivery or mailing to a purchaser located outside the commonwealth or to a purchaser's designee located outside the Commonwealth.

The Company's sales are exempt under section 6(ff) only if the mailing tubes are "printed material ... manufactured in the Commonwealth" within the meaning of that section. We conclude that G.L. c. 64H, § 6(ff) does not apply here. The Company does not sell printed material; it sells plain mailing tubes. Moreover, placing a pre-addressed mailing label on a manufactured mailing tube does not constitute "manufacturing" printed material. Cf. Beckler Press, Inc. v. Commissioner of Revenue, A.T.B. Docket No. 125048 (May 2, 1984) (manufacturing requires significant degree of product change resulting in a product with a significantly new name, nature, and use.)


Very truly yours,
/s/Nicholas L. Metaxas
for Stephen W. Kidder,
Commissioner of Revenue
November 7, 1989
LR 89-11