May 9, 1995

You request a letter ruling on behalf of *************** (hereinafter "The Association"), to the effect that pursuant to G.L. c. 121A, § 10, sales of building materials and supplies to the Association, a nonprofit corporation organized under chapter 180 of the General Laws but empowered to act as a chapter 121A urban redevelopment corporation pursuant to G.L. c. 121A, § 3, are exempt from sales and use taxes under G.L. c. 64H and c. 64I for a period of fifteen years ending on March 19, 2007, or for as long as the Association remains a 121A corporation, whichever is earlier. Additionally, you request that the Department of Revenue ("DOR") issue to the Association Form ST-2, Certificate of Exemption; Form ST-5, Sales Tax Exempt Purchaser Certificate; and Form ST-5C, Contractor's Sales Tax Exempt Purchaser Certificate. For the reasons stated below we rule that sales to the Association are not exempt from sales or use taxes. Thus, the issuance of Forms ST‑2, to the Association, and the use of Forms ST‑5 and ST‑5C by the the Association is unwarranted.

Facts

The Association is a nonprofit corporation organized on March 19, 1992 under G.L. c. 180 for the purpose of purchasing and rehabilitating the ***************. The Boston Redevelopment Authority has approved the project. Once construction is completed, the apartments are to be rented to individuals and families with low and moderate incomes. Empowered to act as an urban redevelopment corporation, the Association is subject to the provisions of G.L. c. 121A. Although a nonprofit corporation, the Association is not exempt from federal income taxation under I.R.C. § 501(c)(3).

Discussion

A. The Sales and Use Tax Statutes

Under G.L. c. 64H, § 2, a five percent sales tax is imposed on all retail sales in Massachusetts of tangible personal property, unless otherwise exempted. If no sales tax is paid on the purchase of tangible personal property, a five percent use tax is imposed on the storage, use, or other consumption of the property in Massachusetts. G.L. c. 64I, § 2. Otherwise, purchases upon which sales tax has been collected are exempt from use tax by G.L. c. 64I, § 7(a).

B. The Exemption Under G.L. c. 121A, § 10

Under G.L. c. 121A, § 10, for fifteen years following the organization of an urban redevelopment corporation, such corporation "shall be exempt from taxation and from betterments and special assessments; and for such period any such corporation shall not be required to pay any tax, excise, or assessment to or for the commonwealth or any of its political subdivisions . . . ." G.L. c. 121A, § 10.

It would seem that § 10 provides the exclusive means by which corporations such as the Association are to be taxed. As sales and use taxes are not among the enumerated exceptions to the § 10 exemption, it would seem that the Association would not be subject to either tax. Yet, this is not the case.

C. Chapter 180 Corporations Empowered to Act as Urban Redevelopment Corporations are not Exempt From Sales or Use Tax

General Laws c. 121A, § 10 was enacted in 1945, at a time when the "shall not be required to pay any tax, excise, or assessment" language contained therein could not have included sales and use taxes. Sales and use taxes were enacted later, on a temporary basis by St. 1966, c. 14 and on a permanent basis by St. 1967, c. 757. As enacted, the sales tax applies to all retail sales in Massachusetts of tangible personal property unless otherwise exempted. G.L. c. 64H, § 2. If no sales tax is paid on the purchase of tangible personal property, a use tax is imposed on the storage, use, or other consumption of the property in Massachusetts. G.L. c. 64I, § 2. However, sales which are exempt from the sales tax are generally exempt from the use tax. G.L. c. 64I, § 7(b). Sales to organizations which are exempted from the sales tax are expressly enumerated in subsections (d) and (e) of G.L. c. 64H, § 6. Sales to corporations organized under chapter 180 of the General Laws but empowered to act as a chapter 121A urban redevelopment corporation pursuant to G.L. c. 121A, § 3, are not among those sales expressly exempted.

It is to be presumed that the Legislature was aware of pre‑existing law, including G.L. c. 121A, § 10, when it enacted Massachusetts sales and use taxes. See, Prudential Insurance Co., at 546; Supreme Council of the Royal Arcanum v. State Tax Commission, 358 Mass. 111, 114 (1970). If the Legislature had intended for chapter 121A corporations and corporations empowered to act as such to be exempt from sales and use taxes, it would have expressly stated so in § 6 of c. 64H, but it did not.

This view is supported by analogy to Royal Arcanum, although the entity involved in that case was a fraternal benefit society. In Royal Arcanum, the Supreme Judicial Court ("SJC") noted that "the Legislature intended cc. 64H and 64I to apply to fraternal benefit societies," despite a 1958 exemption provision contained in G.L. c. 176, § 49, exempting them from "all and every . . . tax other than taxes on real estate and office equipment." Id., at 114‑5. Noting that sales to fraternal benefit societies were not among those sales expressly exempted under chapters 64H and 64I, the SJC concluded that "in expressly exempting sales to certain types of nonprofit organizations from . . . [sales and use taxes,] the Legislature intended to impose the tax on sales to those organizations not enumerated." Royal Arcanum, at 114. Applying the principles and holding in Royal Arcanum to the Association case, the Association's contention cannot prevail.

The Association argues that the Legislature intended to exempt sales to urban redevelopment corporations from sales and use taxes on the basis that at the time of the re‑enactment of G.L. c. 121A, § 10 by St. 1975, c. 827, § 7, the sales and use taxes were firmly established. [1] the Association contends that the re‑enactment of the "shall not be required to pay any tax, excise, or assessment" language at a time when the sales and use taxes were in existence suggests that "shall not be required to pay any tax . . ." includes sales and use taxes. However, "[w]hen statutory language is reenacted, it is a principle of statutory construction that no change was intended in its meaning or scope." Massachusetts Mutual Life Insurance Co. v. Commissioner of Corporations and Taxation, 363 Mass. 685, 691 (1973); N. Singer, Sutherland State . Counts., § 22.33 (5th ed. 1985).

The Legislature is also presumed to have knowledge of the decisions of the Supreme Judicial Court. MacQuarrie v. Bach, 362 Mass. 151, 152 (1972); Selectmen of Topsfield v. State Racing Commission, 324 Mass 309, 313 (1949). Thus, it can be presumed that at the time it enacted St. 1975, c. 827, § 7, the Legislature was aware of the decision in Royal Arcanum.

Conclusion

Sales to the Association of building materials and supplies are not exempt from sales or use taxes pursuant to G.L. c. 121A, § 10. Therefore, Form ST‑2 cannot be issued to the Association and Forms ST‑5 and ST‑5C cannot be used by the Association.

Very truly yours,

/s/Mitchell Adams

Mitchell Adams
Commissioner of Revenue

MA:HMP:pls

LR 95‑5



[1] Since its enactment in 1945, G.L. c. 121A, § 10 has been amended many times. Most significant, is the third amendment to § 10 in 1975. In 1975, St. 1975, c. 827, § 7 struck the then existing G.L. c. 121A, § 10 in its entirety and inserted in its place a new § 10, containing basically the same language as the old § 10.