Directive Directive 88-12: Consignment Sales; Sales at Auction

Date: 09/30/1988
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Sales and Use Tax

FACTS: Baker consigns certain of her household goods to Carter, a retailer, who holds the property in his shop for sale. Baker may withdraw an item from sale at any time before a buyer is found. Once a buyer is found, however, the retailer has full authority to transfer title and possession of the goods to a buyer or to commit Baker to execute any documents necessary to complete the sale.

ISSUE: Must Carter collect and pay over the sales tax on sales of consigned property?

DISCUSSION: Massachusetts imposes an excise upon retail sales of tangible personal property by any vendor. Unless the sale is otherwise exempt, the vendor must collect and pay over the sales tax. G.L. c. 64H, § 2.

Under G.L. c. 64H, § 6(c), the owner of goods originally acquired for personal or household use may sell them without incurring sales tax liability. Such sales are considered exempt as "casual and isolated." See 830 CMR 64H.6.1. The use of an agent to aid in making those sales will not render the transactions taxable unless the agent is a retailer and becomes the vendor of the goods. See Sherman v. Commissioner of Revenue, 24 Mass. App. 64, 67 (1987).

In any given sales transaction, the identity of the vendor is a question of fact. Here, Carter, not the owner, is considered the vendor of the goods since Carter took possession of them with full authority to transfer title and possession to a buyer. Since the actual vendor - Carter - is regularly engaged in the business of making sales at retail, sales of the consigned goods are taxable. The casual and isolated sale exemption no longer applies; the intervention of a retailer as vendor of the goods changes the character of the sale. The same rationale applies when goods are sold by an auctioneer, since an auctioneer is specifically designated a retailer statute. G.L. c. 64H, §§ 1(9)(b).

DIRECTIVE: Since Carter is a vendor regularly engaged in the business of selling tangible personal property at retail, sales of property left with him on consignment are taxable. Carter must collect and pay over the sales tax.

REFERENCE: Sherman v. Commissioner of Revenue, 24 Mass. App. 64 (1987); G.L. 64H, § 1(9)(b), 2, 6(c); 830 CMR 64H.6.1

/s/Stephen W. Kidder
Stephen W. Kidder
Commissioner of Revenue

September 30, 1988

DD 88-12


This Directive represents the official position of the Department of Revenue on the application of the law to the facts as stated. The Department and its personnel will follow this Directive, and taxpayers may rely upon it, unless it is revoked or modified pursuant to 830 CMR 62C.01(5)(e). In applying this Directive, however, the effect of subsequent legislation, regulations, court decisions, Directives, and TIRs must be considered, and Department personnel and taxpayers may rely upon this Directive only if the facts, circumstances and issues presented in other cases are substantially the same as those set forth in this Directive.

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