MASSACHUSETTS DEPARTMENT OF REVENUE REGULATION FACT SHEET

TITLE: 830 CMR 64H.1.1: Service Enterprises

SUMMARY OF REGULATION:
This regulation explains the sales and use tax consequences of certain transactions of service enterprises, such as repairers, cleaners, beauticians, plumbers, linen services, etc. It explains that a service transaction is not subject to the sales tax where (1) the real object of the transaction is the service itself, and no transfer of tangible personal property occurs, or (2) the real object of the transaction is the service itself, and an inconsequential transfer (defined in the regulation) of tangible personal property occurs, and the service enterprise does not separately state the purchase price of the property on the bill to the customer. If an inconsequential transfer of tangible personal property occurs, the service enterprise pays the sales tax when the enterprise purchases the property from a vendor. The regulation also explains that if a service enterprise gives to a vendor a resale certificate for property, subsequently uses the property in a service transaction or under a service contract and does not state separately to its customer the charge for the property and collect tax for the property, the service enterprise must pay sales or use tax on the property. The regulation also explains circumstances when a service transaction is subject to the sales tax.

SUMMARY OF December 21, 2001 Amendment
830 CMR 64 H.1.1(4) provides that if a service enterprise purchases items under a resale certificate and then uses the property in a service contract and does not separately state the charge to the customer, the service enterprise must pay the sales or use tax on the items. 830 CMR 64 H.1.1(5)(g) restates that rule but prior to the 12/21/01 amendment referenced only the use tax. The amendment added "sales tax" to the provision.

REGULATORY HISTORY:
Regulation Promulgated August 30, 1979 (old number 64H.03)
Amended December 21, 2001 - see above.


PREPARED BY: Massachusetts Department of Revenue
Rulings and Regulations Bureau
100 Cambridge Street, 7th floor
Boston, Massachusetts 02114
(617) 626-3250
FAX: (617) 626-3290
December 21, 2001