An official website of the Commonwealth of Massachusetts
This page, Letter Ruling 83-41: Custom-Designed Signs, is offered by
Letter Ruling

Letter Ruling Letter Ruling 83-41: Custom-Designed Signs

Date: 04/28/1983
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Sales and Use

April 28, 1983


___________ Inc. ("Company") sells custom-designed, hand-carved wooden signs at retail. You state that labor represents over ninety per cent of the cost of the signs. You further state that the Company has been paying the sales tax on its purchases of wood and paint used to make the signs, but has not treated its sales of signs as subject to the sales tax. You inquire whether this treatment is correct.

In determining the sales price of tangible personal property on which the sales tax is based, no deduction may be taken on account of labor or service costs or other expenses (G.L. c. 64H, s. 1(14)(ii)).

Personal service transactions that involve no sale of tangible personal property or involve sales as inconsequential elements for which no separate charges are made are exempt from the sales tax (G.L. c. 64H, s. 1(13)(c)). Where the real object of a transaction is the transfer of tangible personal property, the transaction cannot be considered one for personal services, and this exemption does not apply. Houghton Mifflin Co. v. State Tax Commission, 373 Mass. 772 (1977).

Based on the foregoing, it is ruled that the Company's sales of custom-designed signs are subject to the sales tax. The sales price of the signs is the entire amount charged therefor, including labor costs. The Company may give an exempt use certificate (Form ST-12) in lieu of paying a tax on its purchases of wood and paint that become parts of the signs it sells (G.L. c. 64H, s. 6(r)).

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson

Commissioner of Revenue


LR 83-41

Table of Contents

Referenced Sources: