| Date: | 07/08/2002 |
|---|---|
| Organization: | Massachusetts Department of Revenue |
| Referenced Sources: | Massachusetts General Laws |
Tax Administration
Introduction: This directive defines the term "mailing house" for purposes of the exemption contained in G.L. c. 64H, § 6(ff).
Issue: What is a "mailing house" for purposes of G.L. c. 64H, § 6(ff), and what relationship may the "mailing house" have with the purchaser of the printed materials?
Directive: A "mailing house" is a business that performs one or more of the services of assembling, packaging, and addressing printed materials, which it then either delivers directly to the purchaser of the printed materials, i.e., the customer of the mailing house, or the purchaser's designees, or to an interstate carrier or the U.S. Postal Service for delivery to the purchaser or the purchaser's designees. A mailing house must be a separate legal entity from the purchaser of the printed materials. A mailing house may nonetheless be an entity related to the purchaser of the printed materials, such as an affiliated or subsidiary corporation, so long as it holds itself out to the public as providing "mailing house" services and so long as the prices charged for its services are at arms-length rates.
Discussion of Law:
In relevant part, G.L. c. 64H, § 6 (ff) exempts "(s)ales of printed material which is manufactured in the commonwealth to the special order of a purchaser, to the extent such material is delivered to an interstate carrier, a mailing house, or a United States Post Office for delivery or mailing to a purchaser located outside the commonwealth or a purchasers [ sic] designee located outside the commonwealth . . . . (Emphasis supplied.) The exemption was first enacted in 1979 with an effective date of January 1, 1976. The section was amended, effective July 1, 1995, to add a further exemption for "direct and cooperative direct mail promotional advertising materials" not relevant to the issue in this Directive. [1]
The term "mailing house" is not defined in the statute and has not been defined by case law in Massachusetts. In the absence of a statutory definition, the language of a statute must be interpreted in accordance with the usual and natural meaning of the words. The SJC has stated that it follows "[t]he general rule of construction . . . that where the language of the statute is plain, it must be interpreted in accordance with the usual and natural meaning of the words. O'Sullivan v. Secretary of Human Servs., 402 Mass. 190, 194 (1988). This rule has particular force in interpreting tax statutes." Commissioner of Revenue v. AMIWoodbroke, Inc., 418 Mass. 92, 94 (1994). The term "mailing house" is not defined in dictionaries, a customary source for the usual meaning of words. Under these circumstances, trade practice in the printing and mailing industry as well as other rules of statutory construction are appropriate sources of guidance.
The meaning of undefined words or phrases in a statute may be ascertained by reference to the meaning of words or phrases associated with it under the doctrine of "noscitur a sociis". Sutherland Statutory Construction, Sixth Edition, § 47.16, states that this maxim "in practical application means that a word may be defined by an accompanying word, and ordinarily the coupling of words denotes an intention that they should be understood in the same general sense." Blacks Law Dictionary, 5 th Edition, further explains the principle as follows: "The meaning of a word is or may be known from the accompanying words."
In the context of § 6(ff), the meanings of the words preceding and following "mailing house" are clear. An "interstate carrier" accepts items from the public for delivery to others. Similarly, the U.S. Post Office accepts items from the public for delivery to others. Reading the three terms together along with trade practice in the printing and mailing industry suggests that a "mailing house" is an entity holding itself out to the public as providing one or more of the services of assembling, packaging and addressing printed materials, then delivering them to the purchaser of the printed materials, i.e., the customer of the mailing house, or the purchaser's designees or delivering them to an interstate carrier or the U.S. Postal Service for redelivery to the purchaser or the purchaser's designees. The exemption contained in G.L. c. 64H, § 6 (ff) applies only to those printed materials delivered to a purchaser located outside of Massachusetts or to the purchaser's designees located outside of Massachusetts.
A "mailing house" cannot be the same legal entity as the purchaser of the printed materials, such as a division or mail room of the purchaser. Generally, if a purchaser of tangible personal property or the purchaser's agent takes possession of the property within Massachusetts, whether or not for redelivery or use outside Massachusetts, the sale is taxable. 830 CMR 64H.6.7(3)(a)1. If the legislature had intended to exempt printed materials delivered to the purchaser for redelivery to an out-of-state designee, it presumably would have used the term purchaser here as it did elsewhere in the statute.
/s/Alan LeBovidge
Alan LeBovidge
Commissioner of Revenue
AL:DMS:ecl
July 8, 2002
DD 02-7