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Letter Ruling

Letter Ruling Letter Ruling 81-30: Parts and Materials Purchased for Taxicabs

Date: 04/08/1981
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Sales and Use Tax


April 8, 1981

********** ("Company") maintains a fleet of taxicabs that it uses in the operation of its taxi service. Most of these cabs are also rented by the Company on a daily or weekly basis to independent drivers. You inquire whether purchases by the Company of parts and materials for the cabs are subject to tax.

Massachusetts General Laws Chapter 64H, Section 2 imposes an excise an sales at retail of tangible personal property in Massachusetts. Under Chapter 64H, Section 8, all gross receipts of a vendor from the sale of tangible personal property are presumed to be from sales subject to tax until the contrary is established.

Chapter 64H, Section 6(r) exempts from tax sales of materials, tools and fuel, or any substitute therefor, which become an ingredient or component part of tangible personal property to be sold. Leases and rentals are "sales" for purposes of the sales tax. (Chapter 64H, Section 1(12)(a).)

Based on the foregoing, it is ruled that the Company's purchases of parts and materials for its taxicabs are subject to tax, because the items purchased become component parts of taxicabs that the Company not only rents but also operates itself.


Very truly yours,


/s/L. Joyce Hampers


L. Joyce Hampers

Commissioner of Revenue




LR 81-30

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