INTRODUCTION

The purpose of this Technical Information Release is to announce a change in administrative practice applicable to persons who use Direct Payment Certificates to account for the sales tax due on the purchase of taxable tangible personal property or services. Effective April 1, 1994, the Commissioner of Revenue will no longer recognize the validity of Direct Payment Certificates submitted to a vendor, and, as of that date, revokes any and all such Certificates then outstanding. Pursuant to this new practice, purchasers of taxable tangible personal property or services to whom Direct Payment Certificates had been previously issued will no longer be able to use a Direct Payment Certificate to pay the applicable sales tax directly to the Commissioner. Such purchasers will be required either to pay sales tax directly to the vendor at the time of the purchases in question, or, alternatively, to establish their eligibility for an exemption from tax.

DISCUSSION

In general, sales tax on the sale of tangible personal property or services is to be collected by the vendor, who in turn must pay this sales tax to the Commissioner. See G.L. c. 64H,§§ 2, 3(a). However, under a provision of law repealed in 1991, G.L. c. 64H, § 3(b), certain purchasers were granted Direct Payment Certificates, which allowed them to make direct payment of the sales tax to the Commissioner, rather than to the vendor, under circumstances where it was impossible or impractical for them to determine at the time of the purchase whether the purchased goods or services would be taxable or exempt.

In 1991, the Legislature repealed G.L. c. 64H, § 3(b), effective March 8, 1991. See St. 1991, c. 4, § 8. Pursuant to this legislation, the Commissioner ceased issuing Direct Payment Certificates, although he continued to recognize the validity of Certificates previously issued. The Commissioner has determined that the continued use of Direct Payment Certificates issued under the authority of the repealed statutory provision is inconsistent with the Legislature's intent in effecting the repeal of the statute. Therefore, the Commissioner is discontinuing the practice of recognizing Direct Payment Certificates, effective April 1, 1994. As of that date, purchasers of taxable tangible personal property or services to whom Direct Payment Certificates had been previously issued must either pay the sales tax to their vendors at the time of their purchases, or, alternatively, establish that they are eligible for an exemption from tax.

/s/ Mitchell Adams
Mitchell Adams
Commissioner of Revenue

TIR 94-2

February 2, 1994