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Letter Ruling

Letter Ruling Letter Ruling 12-12: Application of MA Sales Tax to Construction Progress Photographs

Date: 10/19/2012
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax


October 19, 2012

You have requested a ruling on behalf of ************ (hereinafter, “the Taxpayer”), an engineering photography company located in **************, MA.  The Taxpayer recently entered into a subcontracting agreement to provide construction progress photography for the general contractor on a public works project undertaken by the Massachusetts Department of Transportation (“MassDOT”).


The following is a statement of facts you have provided and upon which this letter ruling is premised.  The Taxpayer is an engineering photography company that provides construction progress photography, predominantly for public entities.  Typically, the Taxpayer works as a subcontractor hired by the general contractor to fulfill the photographic documentation requirements set forth in the job specifications.  The Contract Proposal included with the Taxpayer’s request for a letter ruling reflects that printed photographs will be delivered and invoiced [to the general contractor] on a monthly basis.”  The general contractor, in turn, has stated that “per contract” it is required to provide MassDOT with the construction progress photographs. 

The Taxpayer has been collecting sales tax in connection with its sales of construction progress photography on public works projects.  Recently, the general contractor on a MassDOT project questioned whether Massachusetts sales tax was properly charged with respect to such photographs as they were to be delivered to a state agency.  For this reason you have requested a ruling as to whether sales tax is due on the sale of the photographs to the general contractor for MassDOT.


Are the Taxpayer’s sales of construction progress photographs to the general contractor on a public works project appropriately subject to Massachusetts sales tax?


Where a customer purchases items of tangible personal property (e.g., photographs) as an agent of an exempt governmental body, is contractually obligated to turn the items tangible property over to the governmental body and the photographs become the property of the governmental body, sales of such tangible property are exempt from Massachusetts sales/use tax.


Massachusetts imposes a 6.25% sales tax on sales at retail of tangible personal property and telecommunication services in Massachusetts by any vendor, unless otherwise exempt.  G.L. c. 64H, §§ 1, 2.  Exemptions from the sales tax are found in G.L. c. 64H, § 6.  Among these exemptions are one applicable to “[s]ales of building materials and supplies to be used in the construction, reconstruction, alteration, remodeling or repair of….any building structure, public highway, bridge or other public works owned by or held in trust for the benefit of any governmental body or agency…..and used exclusively for public purposes.”  G.L. c. 64H, § 6(f).  The building materials exemption would not apply to the fact pattern presented by the Taxpayer.  However, an additional exemption applies to “[s]ales to….the commonwealth or any political subdivision thereof, or their respective agencies.”  G.L. c. 64H, § 6(d).  This exemption may be applicable under the facts described here and relevant case law.  To insure proper treatment of such transactions, the Taxpayer should obtain a properly completed Form ST-5C (Contractor’s Sales Tax Exempt Purchase Certificate) from the contractor to whom it is providing the photographs.  Acceptance of the certificate by the Taxpayer in good faith will relieve it from further sales tax liability.

InHart and McGinley v. Commissioner of Revenue, ATB Docket No. F233702 (August 5, 1998), the taxpayers entered into a contract with the Massachusetts Department of Public Works (“DPW”) to provide consultative services.  As part of the contract the taxpayers were required to provide DPW with copies of its reports.  The taxpayers were reimbursed by DPW for costs, except sales and use taxes, associated with the reproduction of the reports.  The Appellate Tax Board (“Board”) found that all information in the reports was the property of DPW and that the taxpayers had no right to use the reports for their own purposes.  Accordingly, the Board ruled that the taxpayers had “neither ownership nor control over the reports.”  Id. The Board concluded that “absent a ‘use’ of property within the meaning of the statute, the appellants were not subject to use tax under G.L. c. 64I, § 2.”  Id.  Moreover, “the finding that DPW possessed ownership and control of the subject property supported the further conclusion that appellants were agents of DPW in dealing with vendors to get reports copied.”  Id.  See also TIR 99-4 (February 25, 1999) (“Purchases of tangible personal property by a non-exempt party on behalf of an exempt entity are exempt from sales and use tax if the party is the agent of the entity.”); TIR 01-7, (June 15, 2001) (“certain contractors and subcontractors who act as agents for governmental bodies or agencies described in G.L. c. 64H, § 6(d) may purchase tangible personal property exempt from tax if (1) the contractor purchases the property for use in fulfilling a consulting or operating contract to provide qualified services in a public project, and (2) the contractor or subcontractor both purchases the property and is reimbursed for it under the contract.”).


Where a customer acts as an agent of an exempt governmental body, is contractually obligated to turn items of tangible personal property (such as the construction progress photographs in this case) over to an exempt governmental body and the items become the property of such governmental body, sales to such customers are exempt from Massachusetts sales/use tax.  The Taxpayer must obtain a properly completed Form ST-5C from the customer to whom it is providing the items of tangible property before allowing the exemption.

Very truly yours,

/s/Amy Pitter

Amy Pitter
Commissioner of Revenue


LR 12-12

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