I. Introduction

The purpose of this Technical Information Release is to announce a statutory change in the definition of "motor vehicle" for purposes of calculating sales and use tax in situations involving a trade-in of a snow vehicle or recreation vehicle. See St. 1998, c. 75. This change is effective July 8, 1998.

G.L. c. 64H, § 26 (sales tax), and G.L. c. 64I, § 27 (use tax), provide that, "Where a trade-in of a motor vehicle or trailer is received by a dealer in such vehicles holding a valid vendor's registration, upon the sale of another motor vehicle or trailer to a consumer or user, the tax shall be imposed only on the difference between the sales price of the motor vehicle or trailer purchased and the amount allowed on the motor vehicle or trailer traded in on such purchase."
Prior to the statutory change, G.L. c. 64H, § 26, and G.L. c. 64I, § 27, defined "motor vehicle" as a "self-propelled vehicle designed for use and used primarily upon the highway." The recent amendment, St. 1998, c. 75, includes a "snow vehicle" and "recreation vehicle" within the definition of "motor vehicle" for purposes of calculating sales or use tax on trade-ins.

A "snow vehicle" is "a motor vehicle designed to travel over ice or snow, having a curb weight of not more that 453 kilograms or 1,000 pounds, driven by track or tracks in contact with the snow or ice and steered by a ski or skis in contact with the ice or snow. G.L. c. 90B, § 20, as amended by St. 1998, c. 75.

A "recreation vehicle" is "any motor vehicle designed or modified for use over unimproved terrain if used for recreation or pleasure off a public way … provided, however, that … vehicles used for agriculture, forestry, lumbering or construction shall be excluded from this definition when used for such purpose." G.L. c. 90B, § 20.

Snow vehicles and recreation vehicles operated in Massachusetts must be registered with the Department of Fisheries, Wildlife and Environmental Law Enforcement ( FWELE). (1) G.L. c. 90B.

II. Payment of Tax

The recent legislation amends the definition of motor vehicle for purposes of G.L. c. 64H, § 26, and G.L. c. 64I, § 27, but not for purposes of G.L. c. 64H, § 3, which contains the general rules for collection and payment of sales tax. Therefore, registered vendors selling snow vehicles and recreation vehicles in Massachusetts or for use in Massachusetts must continue to collect tax on their retail sales unless otherwise exempt. As before, tax on automobiles or other motor vehicles designed for use on highways, motorcycles and t railers (2) is paid to the Registry (3) pursuant to G.L. c. 64H, § 3. Use tax on snow vehicles or recreation vehicles purchased out of state from non-registered vendors or in private transactions will continue to be paid to the Department of Revenue. (4)

III. Documentation

The trade-in rules applicable to other motor vehicles under the Department's motor vehicle regulation, 830 CMR 64H.25.1(5)(c)1. and 830 CMR 64H.25.1(5)(c)2. also apply to trade-ins of snow vehicles and recreation vehicles. A trade-in credit is not part of the sales price subject to tax if all of the following criteria are met:

(1) the dealer holds a valid Massachusetts Vendor's Registration Certificate,
(2) the dealer entered into the transaction in the regular course of business,
(3) the individual trading in the vehicle previously paid tax on the vehicle traded-in or was exempt from tax on the vehicle traded-in, and
(4) the vehicle traded-in was owned by (and, where applicable, titled to) the purchaser of the new vehicle.

The requirements in (3) and (4), above, may be met by the following documentation for the snow vehicle or recreation vehicle traded-in:

(1) copy of bill of sale showing tax paid, or
(2) copy of Form ST-6 (Certificate of Payment of Sales or Use Tax), or
(3) copy of Form ST-6E (Claim for Exemption from Sales or Use Tax), or
(4) copy of a certificate of registration from FWELE or other evidence that the vehicle was registered in Massachusetts.

The above is the only documentation that can be accepted by the Registry, FWELE or a Massachusetts registered vendor. If a taxpayer believes that he or she has other evidence, not conforming with the above, that nevertheless establishes that he or she paid tax or was exempt from tax on the snow vehicle or recreation vehicle traded-in, that evidence must be submitted to the Department of Revenue with a Form CA-6 (Application for Abatement) after tax has been paid on the full sales price of the motor vehicle being purchased.

When such documentation is provided to a Massachusetts registered vendor, the vendor must retain the documentation for the period its sales/use tax returns are subject to audit by the Department, generally three years from the date the return was filed or required to be filed, whichever occurs later. See G.L. c. 62C, § 26.
Trade-ins of motor vehicles, including snow vehicles and recreation vehicles, may also be used as capitalized cost reductions on a leased motor vehicles. See DOR Directive 97-4.



Mitchell Adams
Commissioner of Revenue

August 25, 1998




1. G.L. c. 90B, § 21, provides: "No person shall operate a snow vehicle or a recreation vehicle unless such vehicle has been registered in accordance with the provisions of this chapter, except on land owned by the owner of such vehicle." ( return to text)

2. For purposes of G.L. c. 64H, § 3, "motor vehicle" is defined as "any self-propelled vehicle designed for use and used primarily upon the highways." ( return to text)

3. Under the Registry's DRIVE program, some dealers are authorized to collect and transmit tax to the Registry electronically. Also see 830 CMR64H.25.1(4)(b.)4. ( return to text)

4. At some locations, tax may also be paid at Department of Fisheries, Wildlife and Environmental Law Enforcement Offices at the time of registration of the snow vehicle or recreation vehicle. ( return to text)