I. Introduction

Massachusetts has recently adopted two Acts: St. 1990, c. 121 (Chapter 121), and St. 1990, c. 150 (Chapter 150). These new laws have substantially modified the provisions of the sales and use tax in Chapters 64H and 64I of the General Laws. The Department of Revenue is issuing this Technical Information Release (TIR) to explain the effect of the new laws on the sales and use taxation of purchases of production-related tangible personal property by radio and television broadcasters and newspaper publishers. In particular, this TIR will discuss the availability of the sales tax exemptions provided by G.L. c. 64H, §§ 6(r) and (s), to broadcasters and newspaper publishers.

II. Broadcasters

A. Exemptions under G.L. c. 64H, § 6(r).

Beginning September 1, 1990, broadcasters will no longer be entitled to the exemption provided by G.L. c. 64H, § 6(r), for purchases of "materials, tools and fuel...which are consumed and used" in the operation of a radio or television station. Section 6(r) which previously allowed the exemption for such items "consumed and used directly and exclusively...in the the operation of commercial radio broadcasting or television transmission" has been changed to eliminate the reference to radio and television broadcasting. See St. 1990, c. 121, § 48. The effective date of the change is September 1, 1990. St. 1990, c. 121, § 110. Therefore, vendors must collect the tax on purchases by broadcasters of tangible personal property made on or after September 1, 1990, unless otherwise exempt, regardless of whether the tangible personal property is used directly and exclusively in the operation of a radio or television station.

B. Exemptions under G.L. 64H, § 6(s).

Beginning September 1, 1990, broadcasters will no longer be entitled to the exemption previously provided by G.L. c. 64H, § 6(s), for purchases of "machinery, or replacement parts thereof, used directly and exclusively ... in the operation of commercial radio broadcasting or television transmission." Section 6(s) has been changed to eliminate the reference to radio and television broadcasting. See St. 1990, c. 121, § 49. The effective date of the change is September 1, 1990. St. 1990, c. 121, § 110. Therefore, vendors must collect the tax on purchases by broadcasters of tangible personal property made on or after September 1, 1990, unless otherwise exempt, regardless of whether the tangible personal property is machinery or replacement parts used directly and exclusively in the operation of a radio or television station.

III. Newspaper Publishers

A. Exemptions under G.L. c. 64H, § 6(r).

Beginning September 1, 1990, newspaper publishers will no longer be entitled to the exemption previously provided by G.L. c. 64H, § 6(r), for purchases of "materials, tools and fuel ... which are consumed and used directly and exclusively ... in an industrial plant in the actual manufacture of tangible personal property to be sold." Newspaper publishers will, however, be entitled to the exemption provided by G.L. c. 64H, § 6(r) for purchases of "materials, tools and fuel ... which become an ingredient or component part of tangible personal property to be sold."

Section 6(r), in essence, includes two separate exemptions. One, the exemption for "materials, tools and fuel ... which are consumed and used directly and exclusively ... in an industrial plant in the actual manufacture of tangible personal property to be sold," has been changed from specifically including "the publishing of a newspaper" within the scope of the exemption to specifically excluding it. 830 CMR 64H.6.3(4) (1982); See St. 1990, c. 121, § 48. The effective date of the change is September 1, 1990. St. 1990, c. 121, § 110. Therefore, vendors must collect the tax on purchases by newspaper publishers of tangible personal property made on or after September 1, 1990, unless otherwise exempt, regardless of whether the tangible personal property is used directly and exclusively in an industrial plant in the actual manufacture of newspapers to be sold.

The other exemption included in Section 6(r), for purchases of "materials, tools, and fuel ... which become an ingredient or component part of tangible personal property to be sold," was not substantially changed by Chapter 121 or Chapter 150. Thus, newspaper publishers may continue to claim the exemption for purchases of tangible personal property that becomes an ingredient or component part of newspapers to be sold.

B. Exemptions under G.L. c. 64H, § 6 (s).

Beginning September 1, 1990, newspaper publishers will no longer be entitled to the exemption previously provided by G.L. c. 64H, § 6(s) for purchases of "machinery, or replacement parts thereof, used directly and exclusively ... in an industrial plant in the actual manufacture, conversion or processing of tangible personal property to be sold.... " Section 6(s) has been changed from specifically including "the publishing of a newspaper" within the scope of the exemption, to specifically excluding it. See St. 1990, c. 121, § 49. The effective date of the change is September 1, 1990. St. 1990, c. 121, §110. Therefore, vendors must collect the tax on purchases by newspaper publishers of tangible, personal property made on or after September 1, 1990, unless otherwise exempt, regardless of whether the tangible personal property is machinery or replacement parts used in an industrial plant in the actual manufacture, conversion or processing of newspapers to be sold.

Stephen W. Kidder
Commissioner of Revenue

TIR 90-9

August 24, 1990