The Massachusetts Appellate Tax Board (ATB) recently issued a decision in Zekos v. Commissioner of Revenue, A.T.B. Docket No. C256053 (May 2, 2002) in favor of the taxpayer. The Commissioner did not appeal this case. This TIR discusses the Commissioner's application of Zekos to fundraising sales made by charitable organizations that use auctioneers to facilitate their sales.
Zekos was a Massachusetts licensed auctioneer who contracted with commercial and charitable organizations to conduct auctions in exchange for a commission and a fee. The Board found that Zekos was a retailer, but not necessarily a vendor, as those terms are defined in G.L. c. 64H, § 1, since he did not have title or possession of the property he auctioned for charitable organizations and therefore did not make a sale rendering him liable for collection and remittance of the tax. The Board further found that the charitable organizations, rather than Zekos, were making the sales at issue. Additionally, the Board found that the sales made by each charitable organization were infrequent and nonrecurring and that the charitable organizations were not engaged in the business of selling tangible personal property. Therefore, the charitable organizations' sales at auction were "casual and isolated" sales within the meaning of G.L. c. 64H, § 6(c). Accordingly, the Board found that the sales by the charitable organizations were not subject to the sales tax.
The Commissioner intends to treat the Zekos decision as confined to its particular facts. Accordingly, sales of tangible personal property by charitable organizations using auctioneers, whether paid or unpaid, to facilitate fundraising events may qualify as casual and isolated sales under G.L. c. 64H, § 6(c) and the Department of Revenue's Casual and Isolated Sales regulation, 830 CMR 64H.6.1, so long as the charitable organization is not making sales of the same type of tangible personal property in the regular course of business.
Generally, an auctioneer continues to be responsible for reporting and collecting of sales and use taxes on all other sales made by the auctioneer as required by G.L. c. 100, § 8, and G.L. c. 64H, § 1. The Commissioner will continue to assess tax in cases involving sales of tangible personal property when auctioneers conduct auctions for entities other than charities in exchange for a commission and/or a fee.
TIR 02-16 supersedes any prior public written statements issued by the Department to the extent that they are inconsistent with this TIR. TIR 02-16 is retroactive with respect to all open tax periods. See 830 CMR 62C.3.1(7)(f).
/s/ Alan L. LeBovidge
Alan L. LeBovidge,
Commissioner of Revenue
September 17, 2002
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