Current through Register 1531, September 27, 2024
(1)
Purpose. The sale or use of motor vehicles, trailers,
and other types of vehicles in Massachusetts is generally subject to the sales
or use tax. 830 CMR 64H.25.1 applies the provisions of M.G.L. c. 64H and M.G.L.
c. 64I, the Massachusetts sales and use tax statutes, to the sale or use of
such vehicles.
(2)
Definitions. When used in 830 CMR 64H.25.1, the
following words have the following meanings, unless the context requires
otherwise:
Average trade-in price or value, the
wholesale or trade-in value which corresponds to a particular make, model,
type, and year of a motor vehicle, trailer, or other vehicle, as listed in the
most recent edition of the applicable National Automobile Dealers Association
(NADA) used vehicle pricing guide or, if specifically agreed upon by the
Commissioner and Registrar, any other values or used vehicle pricing guides
designated under such agreement.
Business entity, a person or entity
regularly engaged in any activity, the object of which is profit or gain,
direct or indirect.
Casual and isolated sale or transfer,
a sale or transfer at retail of a motor vehicle, trailer, or other vehicle
other than a retail sale by a Massachusetts dealer or Massachusetts lessor in
the regular course of business.
Commissioner, the Commissioner of
Revenue or any person authorized or designated to act on the Commissioner's
behalf.
Dealer, a person who is regularly
engaged in the business of buying, selling, or exchanging motor vehicles,
trailers, or other vehicles at retail.
Finance leasing arrangement, a lease
of a motor vehicle, trailer, or other vehicle which qualifies for treatment
under and is taxed under the provisions of I.R.C. § 168(f)(8).
Insurer, a person engaged in the
business of providing personal casualty, property damage, fire and theft
insurance for motor vehicles, trailers, and other vehicles.
Lessor, a person who is regularly
engaged in the business of leasing or renting motor vehicles, trailers, or
other vehicles.
Massachusetts dealer, a dealer who
holds a valid Massachusetts Vendor's Registration Certificate.
Massachusetts lessor, a lessor who
holds a valid Massachusetts Vendor's Registration Certificate.
Massachusetts Vendor's Registration
Certificate, Department of Revenue Form ST-1, lawfully obtained
from and issued by the Commissioner to a dealer or lessor.
Motor Vehicle, a motorized,
self-propelled vehicle which is constructed and designed for transportation or
travel over a land surface; but not including mopeds, motorized bicycles, or
vehicles incapable of speeds in excess of 12 miles per hour which are used
other than for transporting persons or property, and are either used
exclusively for highway building, repair, or maintenance, or are especially
designed for use other than on public highways.
Off-road Vehicle, a motorized,
self-propelled vehicle which is not designed for use nor used primarily for
transportation or travel on public highways.
Purchaser, a buyer, vendee, lessee,
renter, or other person who receives title to or possession of a motor vehicle,
trailer, or other vehicle as the result of a sale.
Registrar, the Registrar of Motor
Vehicles or any person authorized or designated to act on the Registrar's
behalf.
Resale in the regular course of
business, a sale, other than a lease or rental, of a motor
vehicle, trailer, or other vehicle by a Massachusetts dealer, or a lease or
rental of a motor vehicle, trailer, or other vehicle by a Massachusetts lessor,
which is the type of sale or lease, whichever is applicable, upon which the
dealer or lessor primarily relies in the conduct of its business. Resale
includes the use of a vehicle for demonstration or display.
Sale, any transfer of title or
possession, or both, by exchange, barter, lease, rental, conditional or
otherwise, of a motor vehicle, trailer, or other vehicle for a consideration in
any manner or by any means whatsoever.
Sale at retail or retail sale, a sale,
lease, or rental of a motor vehicle, trailer, or other vehicle for any purpose
other than resale in the regular course of business.
Sales Price, the total amount or value
paid or exchanged by a purchaser as consideration for the transfer of title to
or possession of a motor vehicle, trailer, or other vehicle, whether valued in
money or otherwise, less any vehicle manufacturer's excise tax imposed by the
United States.
Sales Tax, the tax imposed by M.G.L.
c. 64H on the retail sale of a motor vehicle, trailer, or other vehicle by a
Massachusetts dealer or Massachusetts lessor in the regular course of
business.
Seller, a vendor, dealer, lessor, or
other person who transfers title to or possession of a motor vehicle, trailer,
or other vehicle in exchange for consideration.
Storage, the keeping or retaining of a
motor vehicle, trailer, or other vehicle for any purpose other than the sale of
the vehicle in the regular course of business or the use of the vehicle
exclusively outside of Massachusetts.
Trade-in, the transfer of complete
ownership of a motor vehicle, trailer, or other vehicle from a purchaser to a
seller, but only if the transfer occurs at the time of and as consideration for
a sale of a similar type of vehicle by the seller to the purchaser.
Trailer, a vehicle which is not
self-propelled, which must be towed by a motor vehicle, and which is
constructed and designed for use upon the public highways.
Transferee, a purchaser or other
person who becomes the legal, equitable, or beneficial owner of a motor
vehicle, trailer, or other vehicle as a result of the sale, lease, gift or
other transfer of title to or possession of a vehicle.
Transferor, a person who sells, gives,
or otherwise transfers legal, equitable, or beneficial ownership or possession
of a motor vehicle, trailer, or other vehicle to a transferee.
Unrealistic sales price, a sales price
which is less than the average-trade-in price.
Use, the exercise of any right or
power over a motor vehicle, trailer, or other vehicle incident to the ownership
of title to or possession of the vehicle; but not including a sale of the
vehicle in the regular course of business.
User, a person who stores, uses,
consumes, or otherwise exercises a right or power over a motor vehicle,
trailer, or other vehicle in Massachusetts.
Use Tax, the tax imposed by M.G.L. c.
64I upon the storage, use, or other consumption of a motor vehicle, trailer, or
other vehicle in Massachusetts.
Vehicle, a motor vehicle, trailer, or
any self-propelled machine constructed and designed primarily for
transportation or travel over a land surface; but not including railroad,
railway, or trolley cars, or any other machines running upon rails or
tracks.
(3)
Imposition of the Sales Tax; Imposition of the Use
Tax.
(a)
General
Rule. Upon the retail sale or other transfer of a motor vehicle,
trailer, or other vehicle in Massachusetts, or upon the storage, use, or other
consumption of a motor vehicle, trailer, or other vehicle in Massachusetts, a
sales or use tax is imposed on the purchaser, transferee, or other user by
either M.G.L. c. 64H or c. 64I. The sales tax, which is imposed by M.G.L. c.
64H, applies only to transfers of title or possession through retail sales by
Massachusetts dealers and Massachusetts lessors in the regular course of
business. The use tax, which is imposed by M.G.L. c. 64I, applies to all other
types of transfers of title or possession where the vehicle transferred is
thereafter stored, used, or otherwise consumed in Massachusetts. The tax is
imposed at the rate of five percent, and is calculated and paid pursuant to the
provisions of the applicable statute and 830 CMR 64H.25.1. No exception,
adjustment, exemption, deduction, or variance of the tax is permitted, unless
specifically authorized by M.G.L. c. 64H or c. 64I and 830 CMR
64H.25.1.
(b)
Sales
Tax.
1. The sale at retail of a
motor vehicle, trailer, or other vehicle by a Massachusetts dealer or
Massachusetts lessor in the regular course of business is subject to the sales
tax imposed by M.G.L. c. 64H, § 2, unless specifically exempt under that
statute and 830 CMR 64H.25.1(5), (7), or (8).
2. Every sale of a motor vehicle, trailer, or
other vehicle in Massachusetts is presumed to be a sale at retail. This
presumption is rebuttable, and may be overcome by sufficient evidence to the
contrary.
(c)
Use Tax.
1. The
storage, use, or other consumption in Massachusetts of a motor vehicle,
trailer, or other vehicle purchased or transferred for storage, use, or other
consumption in Massachusetts, is subject to the use tax imposed by M.G.L. c.
64I, § 2, unless specifically exempt under that statute and 830 CMR
64H.25.1(5), (7), or (8).
2. Every
motor vehicle, trailer, or other vehicle sold or transferred for delivery in
Massachusetts or brought into Massachusetts is presumed to have been sold or
transferred for storage, use, or other consumption in Massachusetts, unless the
vehicle is used exclusively outside of Massachusetts for a period of six months
before the date it is first delivered, brought into, or used in Massachusetts.
This presumption is rebuttable, and may be overcome by sufficient evidence to
the contrary. A vehicle which is used exclusively outside of Massachusetts for
a period of at least six months before it is delivered, brought into, or used
in Massachusetts is subject to the use tax imposed by M.G.L. c. 64I, § 2
only if, at the time of the purchase or transfer, the purchaser or transferee
intended to store, use, or otherwise consume the vehicle in
Massachusetts.
(d)
Examples. The following examples illustrate the
application of 830 CMR 64H.25.1(3).
Example 1: Mr. Blue lives in Florida.
While visiting in Massachusetts he decides to purchase a Volvo from a
Massachusetts dealer for use in Florida. He pays for the vehicle and receives
the certificate of origin to and possession of the vehicle in Massachusetts.
Thereafter he drives the vehicle to his home in Florida. Mr. Blue must pay
Massachusetts sales tax on the Volvo because title to and possession of the
vehicle were transferred to him in Massachusetts.
Example 2: Ms. Green lives in New
Hampshire. She comes to Massachusetts to purchase an automobile for use in New
Hampshire, and orders an Oldsmobile from a Massachusetts dealer at an agreed
upon price. When the vehicle becomes available, the dealer delivers it to Ms.
Green in New Hampshire. Ms. Green then pays the dealer and receives the
certificate of origin to and possession of the vehicle in New Hampshire.
Thereafter she uses it in New Hampshire. The sale to Ms. Green is not subject
to the Massachusetts sales or use tax because neither title to nor possession
of the vehicle was transferred in Massachusetts and because it was not
purchased for use in Massachusetts.
Example 3: Mr. Fox lives in
Massachusetts. While vacationing in Europe he purchases a Volkswagen, which he
then uses to travel through various European countries. Four months later he
returns to Massachusetts with the vehicle. Mr. Fox must pay a use tax to
Massachusetts for the Volkswagen. It is presumed that he purchased the vehicle
for storage, use, or other consumption in Massachusetts because it was not used
exclusively outside of Massachusetts for a six month period following the date
of purchase.
(4)
Procedure for payment of the tax.
(a)
General Rule.
Every purchaser, transferee, or other user having title to or possession of a
motor vehicle, trailer, or other vehicle in Massachusetts who is required by
M.G.L. c. 90 to register the vehicle in Massachusetts, or who is required by
M.G.L. c. 90D to title the vehicle in Massachusetts, must, within ten days of
the date of purchase, transfer, or use, file with the Registrar a completed
Application for Title and Registration (Registry of Motor Vehicles Form RMV-1)
and pay a sales or use tax. If a purchaser, transferee, or other user is not
required by M.G.L. c. 90 to register the vehicle in Massachusetts, and is not
required by M.G.L. c. 90D to title the vehicle in Massachusetts, the purchaser,
transferee, or other user must, on or before the 20th day of the month
following the month of purchase, transfer, or use, file with the Commissioner a
completed Sales Tax Payment form (Department of Revenue Form ST-7R) and pay the
sales or use tax.
(b)
Form of payment. Payment of the sales or use tax must
be as follows:
1.
General
Rule. Payment of the sales or use tax to the Commissioner or
Registrar may be in the form of cash or money order; bank, cashier's, or
certified check; personal or business check of the party in whose name the
vehicle is to be registered; or business check of a Massachusetts dealer,
lessor, insurer or other business entity on its own behalf or on behalf of
others.
2.
Special
rules for payment by personal or business checks. A separate
personal or business check must be submitted for each Application for Title and
Registration (Form RMV-1) and each personal or business check must contain the
following identifying information:
a. the name
and address of the party applying for the title or registration of the vehicle,
as stated on the Application for Title and Registration (Form RMV-1); and
b. the name and address of the
payor, if other than the applicant (
i.e., payment by a
Massachusetts dealer, lessor, insurer, or other business entity on behalf of
the applicant).
The Registrar may not accept any personal or business check
unless it conforms to the requirements of 830 CMR
64H.25.1(4)(b)2.
3.
Personal or business checks
not honored by bank. Where the sales or use tax is paid by
personal or business check by an applicant (or by a business entity on the
applicant's behalf) and the check is not honored by the bank on which the check
is drawn, the following consequences shall occur:
a. the Registrar shall immediately withhold
issuing the Certificate of Title of the vehicle for which the check was
submitted; and
b. the Registrar shall prohibit the transfer
of any Certificate of Registration for such vehicle, and if such Registration
is issued, shall suspend or revoke such Registration;
and
c. the
Registrar shall not issue or renew any learner's permit, license to operate a
motor vehicle, Certificate of Registration or Title, number plates, stickers,
decals or any other items issued under the provisions of M.G.L. c. 90 or 90D,
to any applicant who submits such check to the Registrar or on whose behalf
such check is submitted; and
d. these restrictions shall remain in effect
until said check (or a subsequent check) is honored or until payment in full is
otherwise made and collected.
4.
Electronic Funds
Transfers. The Registrar may, with the approval of the
Commissioner, enter into agreements with Massachusetts business entities (for
example, motor vehicle dealers, lessors, and insurers) to facilitate payment to
the Registrar via electronic funds transfer of the tax due on sales of motor
vehicles. All such taxes are to be transmitted to the Registrar by electronic
funds transfer on a daily basis.
(c)
Issuance of Certificates of
Title and Registration. The Registrar may not issue a Certificate
of Title and Registration for any motor vehicle or trailer unless:
1. the purchaser, transferee, or user pays a
sales or use tax on the vehicle in the full required amount; or
2. the purchaser, transferee or user
establishes that the tax or full amount of the tax is not applicable solely by
reason of an exemption in M.G.L. c. 64H or c. 64I, and in 830 CMR 64H.25.1(5),
(7), or (8). The rules stated in 830 CMR 64H.25.1(4)(c), do not apply when the
Registrar issues a duplicate or a renewal of the Certificate of Title and
Registration.
(d)
Application for Title and Registration. The
Application for Title and Registration (Form RMV-1) must be completed as
follows:
1.
Dealer
sales. In the case of a sale at retail by a Massachusetts dealer
in the regular course of business, the dealer must complete the Application for
Title and Registration (Form RMV-1) and provide five copies thereof to the
purchaser.
2.
Casual
sales. In the case of a casual and isolated sale or transfer, the
purchaser, transferee, or user must complete the Application for Title and
Registration (Form RMV-1) and four copies thereof.
(e)
Payment of tax upon use of
exempt vehicles by dealers or lessors. In the case of a motor
vehicle, trailer, or other vehicle purchased by a Massachusetts dealer or
Massachusetts lessor for resale in the regular course of business, a use tax
becomes due if the vehicle is used by the dealer or lessor in a manner other
than for resale in the regular course of business. The tax is computed on the
cost of the vehicle to the dealer or lessor, including all accessories
installed by the dealer or lessor, and is paid pursuant to M.G.L. c. 64I, and
the applicable provisions of 830 CMR 64H.25.1(4), (5), and (10).
(5)
Computation of the
tax.
(a)
General
Rule. The sales and use tax is 5% of the sales price, subject to
the following rules.
(b)
Unrealistic sales prices on motor vehicles and
trailers. If a motor vehicle or trailer is sold at an unrealistic
sales price, the tax is computed as follows:
1.
Dealer sales. If
the sale is by a Massachusetts dealer in the regular course of business, the
sales tax may be computed on the sales price. Upon payment of the tax, the
Registrar may issue a Certificate of Title and Registration, but the exemption
is subject to the Commissioner's review and verification. In such cases, the
Registrar must forward to the Commissioner a copy of the Application for Title
and Registration (Form RMV-1) pursuant to the provisions of 830 CMR
64H.25.1(6)(d).
2.
Casual and Isolated Sales. If a motor vehicle, trailer
or other vehicle is sold or transferred in a casual and isolated sales
transaction, the sales price for purposes of computing use tax is determined as
follows:
a.
Sales
Price. The sales price of a motor vehicle, trailer or other
vehicle transferred in a casual and isolated sale is the greater of either 1)
the actual amount paid by the purchaser for the vehicle, or 2) the average
trade-in value of the vehicle.
b.
High and low mileage vehicles. In the case of a motor
vehicle or other vehicle with high or low mileage that is transferred in a
casual and isolated sale, the average trade-in value of such a vehicle must be
adjusted upwards or downwards in accordance with any High and Low Mileage
Tables in the applicable used vehicle pricing guide.
A high or low mileage vehicle is identified by the type of
vehicle, the year of manufacture, and the amount of mileage at the time of
transfer.
c.
Salvage titled vehicles. In the case of a motor
vehicle, trailer, or other vehicle titled by the Registrar as a "salvage
vehicle," the sales price upon which the use tax shall be computed is the
actual amount paid by the purchaser for the vehicle, valued in money or money's
worth, without reference to the average trade-in value of such vehicle. For
purposes of this subsection, a salvage vehicle is any vehicle that is
determined by a motor vehicle insurer to be a total loss due to fire,
vandalism, collision, theft, flood or similar event and that has a "SALVAGE
TITLE" stamp on its Form RMV-1.
A salvage vehicle is identified as one of two types: parts only
or repairable. A salvage vehicle determined to be for parts only can never be
retitled or reregistered. A salvage vehicle determined to be repairable may be
retitled and reregistered as a reconstructed or recovered theft vehicle.
The Registrar may not issue a Certificate of Title and
Registration unless the tax is computed in accordance with the provisions in
830 CMR 64H.25.1(5). Upon payment of the tax and the submission of any
documents required under this regulation, the Registrar may issue the
Certificate of Title and Registration. The Registrar must forward to the
Commissioner a copy of the Application for Title and Registration form (Form
RMV-1) and any other documents submitted at the time of registration, pursuant
to the provisions of 830 CMR 64H.25.1(6)(d).
3.
Examples. The
following examples illustrate the application of 830 CMR 64H.25.1(5)(b).
Example 1: S, an individual who is not
a Massachusetts dealer, sells to V, also not a Massachusetts dealer, his Volvo
for $6,000. The average trade-in value of the Volvo is $8,000. The sale is a
casual and isolated sale by an individual, and so the average trade-in value of
$8,000 is the sales price for purposes of calculating the use tax because it is
greater than the actual amount paid of $6,000. Therefore, V must pay a use tax
of $400 ($8,000 x 5%).
Example 2: K, an individual who is not
a Massachusetts dealer, sells to F, also not a Massachusetts dealer, a Ford
with high mileage for $6,000. The average trade-in value listed under NADA for
the Ford is $5,000, but there is a $500 reduction that applies under the NADA
High Mileage Tables. Thus, for use tax purposes, the average trade-in value is
$4,500. The actual sales price of $6,000 is the sales price for purposes of
calculating the use tax because it is greater than the adjusted average
trade-in value of $4,500 ($5,000 minus $500 for high mileage). Therefore, F
must pay a use tax of $300 ($6,000 x 5%).
(c)
Trade-ins on motor vehicles
and trailers. If a motor vehicle or trailer is traded-in or
exchanged on the purchase or transfer of another motor vehicle or trailer, the
tax is computed as follows:
1.
Sales by Massachusetts dealers. If the sale is by a
Massachusetts dealer in the regular course of business and the purchaser either
previously paid a tax on the vehicle traded-in, or is exempt from tax on the
vehicle traded-in under M.G.L. c. 64H or c. 64I and 830 CMR 64H.25.1(5), (7) or
(8), the sales tax is computed on the sales price, reduced by any amount
credited towards the sales price by reason of a trade-in.
2.
Casual and isolated sales and
transfers. If the sale or transfer is a casual and isolated sale
or transfer, the use tax is computed on the sales price, which may not be
reduced by any amount credited towards the sales price by reason of a
trade-in.
3.
Special
definition of "motor vehicle" for purposes of trade-ins. For the
purposes of 830 CMR 64H.25.1(5)(c), the term "motor vehicle" means a vehicle
designed for use and used primarily for transportation or travel on public
highways. Off-road vehicles such as crawler tractors, front end loaders,
cranes, and similar or other off-road vehicles are not motor vehicles or
trailers under 830 CMR 64H.25.1(5)(c). Accordingly, a reduction from the sales
price for amounts credited toward the sales price by reason of trade-ins for
such vehicles is never allowed in computing the amount of tax due on a sale or
transfer of an off-road vehicle.
(d)
Examples. The
following examples illustrate the application of 830 CMR 64H.25.1(5)(c). For
purposes of 830 CMR 64H.25.1(5)(d), the actual purchase price is presumed to be
greater than the average trade-in value of vehicles described in examples 4 and
5.
Example 1: D, who is a Massachusetts
dealer, sells a Chevrolet in the regular course of business to P for $6,000.
Upon registration of the car, P must pay a sales tax of $300 ($6,000 x
5%).
Example 2: S, who is a Massachusetts
dealer, sells a Chrysler in the regular course of business to B for $6,000. S
credits B with $2,000 toward the sales price for a Ford which B trades in. B
must pay a sales tax of $200 ($6,000 minus $2,000 for the trade-in, x
5%).
Example 3: N, a New Hampshire dealer
who does not hold a Massachusetts Vendor's Registration Certificate, sells a
Honda for use in Massachusetts to M, a Massachusetts resident, for $6,000. N
credits M with $2,000 toward the sales price for a 1972 Plymouth which M trades
in. M must pay a use tax of $300 ($6,000 x 5%). Since N is not a Massachusetts
dealer selling the vehicle in the regular course of business, the sales price
is not reduced by the $2,000 credited for the trade-in of M's 1972
Plymouth.
Example 4: Y, who is not a
Massachusetts dealer, sells Z, who is not a Massachusetts dealer, his $6,000
Cadillac in exchange for Z's $2,000 Buick and $4,000 in cash. Since neither Y
nor Z is purchasing a motor vehicle from a Massachusetts dealer in the regular
course of business, each must pay a use tax. Y must pay a use tax of $100 on
the Buick ($2,000 x 5%). Z must pay a use tax of $300 on the Cadillac ($6,000 x
5%).
Example 5: H, who is not a
Massachusetts dealer, sells his $6,000 Mazda to J, who is not a Massachusetts
dealer, for J's $2,000 Volkswagen and $4,000 worth of J's services working on
H's house. H must pay a use tax for the Volkswagen of $100 ($2,000 x 5%). J
must pay a use tax on the Mazda of $300 ($6,000 x 5%).
(6)
Procedures for
establishing exemptions from tax.
(a)
General Rule. No
sale or transfer of a motor vehicle, trailer, or other vehicle is exempt from
the full amount, or any part, of the sales or use tax for any reason other than
the exemptions stated in M.G.L. c. 64H or c. 64I, or 830 CMR 64H.25.1(5), (7),
or (8).
(b)
Exemptions
by Commissioner. The Commissioner may allow any exemption
authorized by M.G.L. c. 64H, c. 64I, or 830 CMR 64H.25.1(5), (7), or (8). In
considering a claim of exemption under any Division of 830 CMR 64H.25.1(5),
(7), or (8), the Commissioner may accept evidence in the form and of the type
described in the Division, or in any other form and of any other type the
Commissioner determines is acceptable.
(c)
Exemptions by
Registrar. The Registrar may not allow any exemption unless the
right to grant the exemption is expressly authorized to the Registrar in 830
CMR 64H.25.1(5), (7), or (8). In considering a claim of exemption under any
Division of 830 CMR 64H.25.1(5), (7), or (8), the Registrar may not accept any
evidence unless it is in the form and of the type described in the
Division.
(d)
Review of
unrealistic sales prices and other exemptions. In every case in
which the tax is computed on an unrealistic sales price, and in every case in
which an exemption is allowed with respect to the payment of the full amount,
or any part, of the sales or use tax, the Application for Title and
Registration (Form RMV-1) or Sales Tax Payment form (Form ST-7R), whichever is
applicable, is subject to review and verification by the Commissioner. The
Registrar or other person accepting the Application for Title and Registration
(Form RMV-1) or Sales Tax Payment form (Form ST-7R), or otherwise granting the
exemption must, within 30 days from the date the exemption is granted, or
within such other period as the Commissioner may determine:
1. inform the Commissioner that the
applicable forms and other documents are for the Commissioner's review and
verification;
2. inform the
Commissioner of the identity, position, title, and office of the person
granting the exemption;
3. inform
the Commissioner of the specific statutory and regulatory provisions
authorizing the granting of the exemption;
4. attach all applicable forms and documents,
and any other evidence submitted in connection with the granting of the
exemption; and
5. forward to the
Commissioner for review and verification a copy of the applicable forms, along
with all the required attachments.
(7)
Specific statutory
exemptions.
(a)
General Rule. The sale or transfer of a motor vehicle,
trailer, or other vehicle is exempt from the sales and use tax under M.G.L. c.
64H and c. 64I and 830 CMR 64H.25.1(7), as follows.
(b)
Sales and purchases for
resale. Sales and purchases for resale by Massachusetts dealers
and Massachusetts lessors are exempt from tax, subject to the following rules:
1. Requirements for exemption:
a. The sale of a motor vehicle, trailer, or
other vehicle to a Massachusetts dealer who purchases the vehicle exclusively
for resale in the regular course of business is exempt from the sales and use
tax only if the vehicle is in fact used exclusively for resale. The sale of a
motor vehicle, trailer, or other vehicle to a Massachusetts lessor who
purchases the vehicle exclusively for lease or rental in the regular course of
business is exempt from the sales and use tax under the preceding sentence only
if the vehicle is in fact used exclusively for lease or rental. The sale of a
motor vehicle, trailer, or other vehicle to a Massachusetts dealer or
Massachusetts lessor who purchases the vehicle for demonstration or display is
considered a purchase for resale in the regular course of business and is
exempt from the sales and use tax under 830 CMR 64H.25.1(7)(b).
b. The sale of a motor vehicle, trailer, or
other vehicle to a person who is an agent, employee, or other representative of
a Massachusetts dealer or Massachusetts lessor is a sale to the dealer or
lessor if the Certificate of Origin, Title, or other document of ownership is
issued, transferred, or assigned in the name of the dealer or lessor. The sale
of a motor vehicle, trailer, or other vehicle to a person claiming to be an
agent, employee, or other representative of the dealer or lessor is presumed
not to be a sale to the dealer or lessor if the Certificate of Origin, Title,
or other document of ownership is not issued, transferred, or assigned in the
name of the dealer or lessor. The presumption in the preceding sentence of 830
CMR 64H.25.1(7)(b)1.b., is rebuttable, and may be overcome only by sufficient
evidence to the contrary submitted to the Commissioner in connection with an
application for abatement or other administrative appeal authorized under the
laws of Massachusetts.
c. If the
sale of a motor vehicle, trailer, or other vehicle is exempt from tax under 830
CMR 64H.25.1(7)(b), at the time of purchase, and if the vehicle is subsequently
used by a dealer or lessor in a manner other than for resale in the regular
course of business, such subsequent use will subject the dealer or lessor to a
use tax. The dealer or lessor must pay the tax pursuant to the applicable
provisions of 830 CMR 64H.25.1(4), (5), and (10).
2. This exemption may be allowed only by the
Commissioner. The registrar may not issue a Certificate of Title and
Registration for a vehicle as to which a claim of exemption under 830 CMR
64H.25.1(7)(b), has been made unless the Commissioner has first approved the
exemption on the Application for Title and Registration (Form RMV-1).
3. To establish a claim of exemption under
830 CMR 64H.25.1(7)(b), a dealer or lessor must hold a Massachusetts Vendor's
Registration Certificate and, if required by M.G.L. c. 140, must hold a license
issued by the city, town, or municipality in which it is located. If a dealer
applies for title only to a vehicle, the dealer must submit to the Commissioner
a completed Application for Title and Registration (Form RMV-1), a completed
Massachusetts Resale Certificate (Department of Revenue Form ST-4), and a copy
of a current Dealer's License issued pursuant to M.G.L. c. 140 by the city,
town, or other municipality in which it is located. If a lessor applies for
title only to a vehicle, the lessor must submit to the Commissioner a completed
Application for Title and Registration (Form RMV-1), a completed Massachusetts
Resale Certificate (Form ST-4), and a completed Application for Deferred
Payment form (Department of Revenue Form ST-7L). If a lessor applies for
registration of a vehicle, the lessor must submit to the Commissioner a
completed Application for Title and Registration (Form RMV-1) and a completed
Application for Deferred Payment form (Form ST-7L).
4. Every Massachusetts dealer and
Massachusetts lessor must apply to the Commissioner every three years for
renewal of its Massachusetts Vendor's Registration Certificate by submitting to
the Commissioner on or before January 30 of the applicable calendar year an
Application for Re-certification form (Department of Revenue Form MVU-5A). If a
dealer or lessor is required by M.G.L. c. 140 to be licensed by the city, town,
or municipality in which it is located, the dealer or lessor must also submit a
copy of its current license. A Massachusetts dealer or Massachusetts lessor who
fails to obtain renewal of its Massachusetts Vendor's Registration Certificate
as required herein shall not be entitled to an exemption under 830 CMR
64H.25.1(7)(b).
5. The Commissioner
shall maintain a current listing of all Massachusetts dealers and Massachusetts
lessors registered in Massachusetts to purchase motor vehicles for resale in
the regular course of business who are required to comply and have complied
with the requirements of 830 CMR 64H.25.1(7)(b). The Commissioner will not
grant an exemption nor approve an exemption on an Application for Title and
Registration (Form RMV-1) under 830 CMR 64H.25.1(7)(b), unless the name of the
dealer or lessor seeking the exemption appears on the listing.
(c)
Sales to exempt
organizations. The sale or transfer of a motor vehicle, trailer,
or other vehicle to an organization qualifying for treatment under I.R.C.
§ 501(c)(3) is exempt from the sales and use tax only if the vehicle is
purchased by or transferred to the organization, registered in its name, and
used directly and exclusively in pursuit of the purposes of the organization.
1. This exemption may be allowed only by the
Commissioner. The Registrar may not issue a Certificate of Title and
Registration for any vehicle as to which a claim of exemption under 830 CMR
64H.25.1(7)(c), has been made unless the Commissioner has first approved the
exemption on the Application for Title and Registration (Form RMV-1).
2. To establish a claim of exemption under
830 CMR 64H.25.1(7)(c), the purchaser or transferee must hold a Certificate of
Exemption (Department of Revenue Form ST-2) issued by the Commissioner. The
Commissioner may issue the certificate to an organization qualifying for this
exemption upon receipt of a completed Application for Registration form (Form
TA-1).
(d)
Sales to government agencies. The sale or transfer of
a motor vehicle, trailer, or other vehicle to the United States or
Massachusetts, or to their respective subdivisions or agencies, is exempt from
the sales and use tax. This exemption may be allowed by the Registrar, but only
if the vehicle is registered in the name of the agency claiming the
exemption.
(e)
Intra-family casual and isolated sales or transfers.
The casual and isolated sale or transfer of a motor vehicle, trailer, or other
vehicle is exempt from the sales and use tax as follows:
1. Requirements for exemption:
a.
Motor vehicles and
trailers. The casual and isolated sale or transfer of a motor
vehicle or trailer is exempt from the sales and use tax only if the purchaser
or transferee is the parent, spouse, child, brother, or sister of the seller or
transferor. For the purposes of 830 CMR 64H.25.1(7)(e), a vehicle owned jointly
by a husband and wife may be treated as owned by either.
b.
Other vehicles.
The casual and isolated sale or transfer of a vehicle other than a motor
vehicle or trailer is exempt from the sales and use tax.
2. This exemption may be allowed by the
Registrar, but only if the seller or transferor previously registered the
vehicle in Massachusetts, and if the Registrar receives an affidavit signed by
the seller or transferor and the purchaser or transferee identifying the
specific relationship between the parties to the sale or transfer, and stating
that they are so related. If the surnames of the parties to the sale or
transfer are the same, or if the parties reside at the same address, only the
purchaser or transferee is required to sign the affidavit. The affidavit must
be on a form prescribed by the Commissioner.
(f)
Sales to the
disabled. The sale or transfer of a motor vehicle to and for the
use of any person who has suffered the loss or permanent loss of use of both
legs, or both arms, or one leg and one arm is exempt from the sales and use
tax. For the purposes of 830 CMR 64H.25.1(7)(f), a vehicle owned jointly by a
husband and wife may be treated as owned by either.
1. This exemption applies only to a single
motor vehicle which must be purchased by and registered for the personal,
non-commercial use of the purchaser or transferee qualifying for this
exemption.
2. Loss of use under 830
CMR 64H.25.1(7)(f), means a loss of function of at least 80%.
3. This exemption may be allowed by the
Registrar, but only if the Registrar receives an affidavit from the person
qualifying for this exemption and the person's physician stating that the
person suffers a loss of use described in 830 CMR 64H.25.1(7)(f). If the claim
of exemption is based upon the loss of two arms or two legs, or one arm and one
leg, the affidavit may be signed by either the person qualifying for the
exemption or the person's physician. The affidavit must be on a form prescribed
by the Commissioner.
(g)
Out-of-state transfers. The sale or transfer of a
motor vehicle, trailer, or other vehicle in any state or territory within the
United States that is subsequently brought to or used in Massachusetts is
exempt from Massachusetts use tax as follows:
1. Requirements for exemption:
a. the purchaser or the transferee must have
paid a sales or use tax on the vehicle to the state or territory in which the
sale or transfer occurred;
b. the
sales or use tax must have been paid by the purchaser or the transferee and
legally due the state or territory;
c. the purchaser or the transferee must not
have received and must not have a right to receive a refund or credit of the
sales or use tax from the state or territory in which the sale or transfer
occurred; and,
d. the state or
territory to which the sales or use tax was paid must allow a corresponding
exemption with respect to motor vehicle sales and use taxes paid to
Massachusetts.
2. This
exemption may be allowed only by the Commissioner. The Registrar may not issue
a Certificate of Title and Registration for any vehicle as to which a claim of
exemption under 830 CMR 64H.25.1(7)(g) has been made unless the Commissioner
has first approved the exemption on the Application for Title and Registration
(Form RMV-1).
3. To establish a
claim of exemption under 830 CMR 64H.25.1(7)(g), the purchaser or transferee
must submit to the Commissioner a receipt from the state or territory in which
the sale or transfer occurred, showing the amount of sales or use tax paid, the
date and place of payment, and the name of the payor. If the purchaser or
transferee does not submit a receipt, the Commissioner may accept a Certificate
of Title and Registration issued to the purchaser or transferee from the state
or territory in which the sale or transfer occurred as proof that the tax was
previously paid by the purchaser or transferee. The purchaser or transferee
must also submit to the Commissioner an affidavit stating that the purchaser or
transferee did not receive and is not entitled to receive credit or refund of
the tax. The affidavit must be on a form prescribed by the
Commissioner.
4. If this exemption
applies and if the rate of tax imposed by the state or territory in which the
vehicle was sold or transferred is less than the rate imposed by Massachusetts,
the purchaser or transferee must pay a use tax computed by multiplying the
sales price of the vehicle by the difference between the Massachusetts rate and
the rate imposed by the state or territory in which the vehicle was sold or
transferred. The tax must be paid pursuant to 830 CMR 64H.25.1(4) and
(5).
5.
Examples. The following examples illustrate the
application of 830 CMR 64H.25.1(7)(g).
Example 1: Mr. Jones is a resident of
State X, which has no sales or use taxes. Mr. Jones purchases a motor vehicle
in State X, where he registers it and uses it for three months. He then moves
to Massachusetts and registers the vehicle in Massachusetts. Mr. Jones must pay
a use tax in Massachusetts because he did not pay a sales or use tax on the
vehicle in State X.
Example 2: Mr. Right lives in
Massachusetts. While vacationing in State Z, Mr. Right purchases a motor
vehicle for $10,000 and thereafter brings it to Massachusetts. Under the sales
and use tax laws of State Z, Mr. Right is required to pay and does pay a sales
tax to State Z computed at the rate of 4% of the sales price (or $400). State Z
honors the sales and use tax laws of Massachusetts and does not impose its
sales and use tax on vehicles which are purchased and taxed in Massachusetts.
Mr. Right must pay a use tax to Massachusetts, but the tax is computed on the
sales price multiplied by the difference between the Massachusetts rate (5%)
and the rate of tax in State Z (4%). The use tax is therefore $10,000 x 1% or
$100.
For additional examples, see 830 CMR
64H.25.1(3)(d).
(h)
Vehicles used in interstate
commerce. The sale or transfer of a motor vehicle, trailer, or
other vehicle in any state or territory within the United States that is
subsequently brought to or used in Massachusetts for purposes of interstate
commerce, is exempt from Massachusetts use tax if the sale or transfer of the
vehicle is exempt under the provisions of 830 CMR 64H.25.1(7)(g), or if the use
of the vehicle in Massachusetts as part of interstate commerce is exempt from
use tax under the Constitution or laws of the United States. For the purposes
of this subsection, the use of such a vehicle in Massachusetts as part of
interstate commerce is exempt from Massachusetts use tax under the Constitution
or laws of the United States only if application of the use tax violates the
test applied by the United States Supreme Court in
Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274 (1977), or any other test
subsequently developed by the courts or enacted under the laws of the United
States. Under the
Complete Auto Transit test, the imposition
of a use tax is permissible if
1. the tax is
applied to an activity that has a substantial nexus with
Massachusetts;
2. the tax is fairly
apportioned;
3. the tax does not
discriminate against interstate commerce; and,
4. the tax is fairly related to the services
provided by the taxing authority.
Complete Auto Transit, Inc. v. Brady, 430 U.S.
at 279.
(i)
Sales of fire engines or ambulances. The sale or
transfer of a fire engine or ambulance to and the use thereof by a volunteer
non-profit organization providing public fire protection is exempt from the
sales and use tax.
1. This exemption may be
allowed only by the Commissioner. The Registrar may not issue a Certificate of
Title and Registration for a vehicle as to which a claim of exemption under 830
CMR 64H.25.1(7)(i), has been made unless the Commissioner has first approved
the exemption on the Application for Title and Registration (Form
RMV-1).
2. To establish a claim of
exemption under 830 CMR 64H.25.1(7)(i), the purchaser or transferee must submit
to the Commissioner an affidavit from an authorized representative of the
organization stating that:
a. the organization
is registered as a volunteer non-profit organization providing public fire
protection; and
b. the vehicle was
purchased or transferred exclusively for use as a fire engine or ambulance by
the organization.
The affidavit must be on a form prescribed by the
Commissioner.
(j)
Sales to common
carriers. The sale of a motor bus to a common carrier to provide
scheduled intracity local service is exempt from the sales and use tax.
1. This exemption may be allowed only by the
Commissioner. The Registrar may not issue a Certificate of Title and
Registration for a vehicle as to which a claim of exemption under 830 CMR
64H.25.1(7)(j), has been made unless the Commissioner has first approved the
exemption on the Application for Title and Registration (Form RMV-1).
2. To establish a claim of exemption under
830 CMR 64H.25.1(7)(j), the carrier must hold a Certificate of Exemption form
(Department of Revenue Form MVU-20) issued by the Commissioner. The
Commissioner may issue the certificate to a carrier qualifying for this
exemption upon receipt of a certificate from the Department of Public Utilities
(or from a city, town, or municipality pursuant to its authority under M.G.L.
c. 161A, § 11A) stating that the motor bus will be used for scheduled
intracity local service.
(k)
Sales to foreign
diplomats. The sale or transfer of a motor vehicle, trailer, or
other vehicle to an ambassador, minister, foreign mission or other diplomatic
representative of a foreign government is exempt from the sales and use tax.
1. This exemption may be allowed only by the
Commissioner. The Registrar may not issue a Certificate of Title and
Registration for a vehicle as to which a claim of exemption under 830 CMR
64H.25.1(7)(k), has been made unless the Commissioner has first approved the
exemption on the Application for Title and Registration (Form RMV-1).
2. To establish a claim of exemption under
830 CMR 64H.25.1(7)(k), the purchaser or transferee must submit to the
Commissioner a copy of a Tax Exemption Card or Mission Tax Exemption Card from
the United States Department of State issued to or in the name of the purchaser
or transferee.
(8)
Transfers without
consideration.
(a)
General Rule. The transfer of a motor vehicle,
trailer, or other vehicle without consideration is exempt from the sales and
use tax. Transfers which qualify as transfers without consideration are listed
in 830 CMR 64H.25.1(8), and are exempt from tax subject to the following
rules.
(b)
Transfers by
gift. The transfer of complete ownership of a motor vehicle,
trailer, or other vehicle by a donor to a donee, without consideration and with
an intent on the part of the donor that the transfer is a gift, is exempt from
the sales and use tax.
1. This exemption may
be allowed only by the Commissioner. The Registrar may not issue a Certificate
of Title and Registration for a vehicle as to which a claim of exemption under
830 CMR 64H.25.1(8)(b), has been made unless the Commissioner has first
approved the exemption on the Application for Title and Registration (Form
RMV-1).
2. To establish a claim of
exemption under 830 CMR 64H.25.1(8)(b), both donor and donee must submit to the
Commissioner an affidavit on a form prescribed by the Commissioner stating
that:
a. neither party made or received
payment in any form in connection with the transfer;
b. neither party made a promise of payment
for the vehicle, and neither party expects payment in the future;
c. neither party assumed any debt in
connection with the transfer; and
d.
at the time of the transfer, the donor intended to make a gift of the vehicle
to the donee.
(c)
Transfers for contests,
drawings, and raffles. The transfer of a motor vehicle, trailer,
or other vehicle to the winner of a contest, drawing, or raffle is deemed to be
a gift from the sponsor to the winner, and the winner is exempt from the sales
and use tax. However, the donation of a vehicle by a dealer or lessor for a
contest, drawing, or raffle is a use of the vehicle by the dealer or lessor
other than for resale in the regular course of business, and, accordingly, is
subject to the use tax. The use tax must be paid by the dealer or lessor
pursuant to 830 CMR 64H.25.1(4) and (5). The tax is computed on the cost of the
vehicle to the dealer or lessor, including the cost of all accessories
installed by the dealer or lessor.
1. This
exemption may be allowed only by the Commissioner. The Registrar may not issue
a Certificate of Title and Registration for a vehicle as to which a claim of
exemption under this Division, 830 CMR 64H.25.1(8)(c), has been made unless the
Commissioner has first approved the exemption on the Application for Title and
Registration (Form RMV-1).
2. To
establish a claim of exemption under 830 CMR 64H.25.1(8)(c), the winner must
submit to the Commissioner an affidavit on a form prescribed by the
Commissioner and signed by both the winner and an authorized representative of
the sponsor which:
a. states the name and
address of the person, if any, donating the vehicle to the sponsor;
b. states the name and address of the
sponsor; and
c. states that the
person seeking the exemption is the contest winner.
(d)
Transfers by
inheritance. The transfer of a motor vehicle, trailer, or other
vehicle at death, by intestacy, will, or otherwise, to an heir, legatee, or
other beneficiary is exempt from the sales and use tax.
1. This exemption may be allowed by the
Registrar, but only upon receipt of the following:
a. a copy of a Notice of Appointment from a
Probate Court identifying the executor, administrator, or other personal
representative of the decedent's estate, if applicable; and
b. an affidavit, signed by both the executor,
administrator, or other personal representative of the decedent's estate and
the transferee, stating that the transferee is entitled to the title to or
possession of the vehicle under the laws of intestacy, under the will, or
otherwise. The affidavit must be on the letterhead of the executor,
administrator, or other personal representative, or on a form prescribed by the
Commissioner.
2. If the
transferee is the surviving spouse of the decedent, the Registrar may accept,
in lieu of any other documents, a copy of the decedent's death certificate and
an affidavit signed by the surviving spouse, stating that he or she is entitled
to the vehicle under the laws of intestacy, under the will, or
otherwise.
(e)
Transfers by repossession. The transfer by
repossession of a financed or secured motor vehicle, trailer, or other vehicle
to the lienholder or security holder is exempt from the sales and use tax, but
only if a sales or use tax on the vehicle was previously paid by the debtor. If
the lienholder or security holder thereafter registers the vehicle with the
Registrar, this exemption does not apply.
1.
This exemption may be allowed only by the Commissioner. The Registrar may not
issue a Certificate of Title and Registration for a vehicle as to which a claim
of exemption under 830 CMR 64H.25.1(8)(e), has been made unless the
Commissioner has first approved the exemption on the Application for Title and
Registration (Form RMV-1).
2. To
establish a claim of exemption under 830 CMR 64H.25.1(8)(e), the lienholder or
security holder must submit to the Commissioner the following:
a. the Certificate of Title stating the name
of the lienholder or security holder;
b. an affidavit on a form prescribed by the
Commissioner signed by an authorized representative of the lienholder or
security holder stating that the vehicle was repossessed under authority of a
lien or security interest; and
c.
proof that a sales or use tax on the vehicle was previously paid by the debtor.
A Certificate of Title and Registration in the name of the debtor is sufficient
to satisfy this requirement.
(f)
Transfers to
insurers. The transfer of a motor vehicle, trailer, or other
vehicle to an insurer is exempt from the sales and use tax, but only if the
transfer is made by an insured in connection with a claim for the loss or loss
of use of the vehicle under an insurance policy, and if a sales or use tax on
the vehicle was previously paid by the insured. If the insurer thereafter
registers the vehicle with the Registrar, this exemption does not apply.
1. This exemption may be allowed only by the
Commissioner. The Registrar may not issue a Certificate of Title and
Registration for a vehicle as to which a claim of exemption under 830 CMR
64H.25.1(8)(f), has been made unless the Commissioner has first approved the
exemption on the Application for Title and Registration (Form RMV-1).
2. To establish a claim of exemption under
830 CMR 64H.25.1(8)(f), the insurer must submit to the Commissioner an
affidavit signed by an authorized representative of the insurer stating that
the vehicle was transferred by an insured in connection with a claim under an
insurance contract for the loss or loss of use of the vehicle. The affidavit
must be on a form prescribed by the Commissioner. A Certificate of Title and
Registration in the name of the insured is sufficient to satisfy the
requirement that the insured previously paid a tax on the vehicle.
(g)
Sales and
transfers to or from business entities. The sale or transfer of a
motor vehicle, trailer, or other vehicle to or from a business entity is
generally subject to the sales or use tax. However, the sale or transfer of a
motor vehicle, trailer, or other vehicle to or from a business entity is exempt
from tax as follows:
1. Requirements for
exemption. In all cases the transferor must have previously paid a sales or use
tax on the vehicle; and
a. the sale or
transfer must be pursuant to a transaction which qualifies as a
"reorganization" within the meaning of I.R.C. § 368(a)(1); or
b. the sale or transfer must be pursuant to
the formation of a partnership or corporate trust, or pursuant to the
organization of a corporation, solely in exchange for an ownership interest in
the enterprise; or
c. the sale or
transfer must be to an owner of a business entity solely in exchange for the
owner's interest on the complete dissolution of a partnership or corporate
trust, or the complete liquidation of a corporation.
2. The sale or transfer of a vehicle by a
business entity in exchange for cash or other consideration which is thereafter
distributed to an owner on the dissolution of a partnership or corporate trust,
or on the liquidation of a corporation, is not exempt from tax under 830 CMR
64H.25.1(8)(g).
3. This exemption
may be allowed only by the Commissioner. The Registrar may not issue a
Certificate of Title and Registration for a vehicle as to which a claim of
exemption under 830 CMR 64H.25.1(8)(g), has been made unless the Commissioner
has first approved the exemption on the Application for Title and Registration
(Form RMV-1).
4. To establish a
claim of exemption under 830 CMR 64H.25.1(8)(g), the Commissioner must receive
an affidavit on a form prescribed by the Commissioner and signed by an
authorized representative of the transferor and by an authorized representative
of the transferee stating that the sale or transfer is exempt from tax, and
stating the specific provisions within 830 CMR 64H.25.1(8)(g), under which the
exemption is claimed. If a Final Determination Letter from the Internal Revenue
Service has been issued with respect to the transaction, the letter must
accompany the affidavit. A Certificate of Title and Registration in the name of
the transferor is sufficient to satisfy the requirement that the transferor
previously paid a tax on the vehicle.
5. If the sale or transfer occurs within 90
days from the date of the transaction under which the exemption is claimed, it
is presumed that the sale or transfer qualifies for this exemption. If the sale
or transfer occurs after the 90th day following the date of the transaction
under which the exemption is claimed, it is presumed that the transfer does not
qualify for this exemption. Both of the presumptions under 830 CMR
64H.25.1(8)(g)5. are rebuttable, and may be overcome by sufficient evidence to
the contrary.
6. If the
Commissioner reasonably believes that the transaction under which the exemption
is claimed was undertaken not for a bona fide business purpose but to avoid
imposition of any tax, the exemption will not be approved.
(9)
Rules
for computation of tax by lessors.
(a)
General Rule.
The lease or rental of a motor vehicle, trailer, or other vehicle by a lessor
in the regular course of business is a sale at retail and is subject to the
sales tax. Each period for which a lease or rental payment is charged is
considered a completed retail sale for the purpose of the imposition,
collection, and payment of the tax. The sales price on which the tax is
computed for each period is the total lease or rental charges for that period,
subject to the following rules:
1. If a motor
vehicle, trailer, or other vehicle is leased or rented for a period of one year
or more, and if the amount charged includes charges for fuel, insurance, motor
vehicle excise, or registration fee, and if the charges for those items are
separately stated in the lease, rental agreement, or billing, the charges for
those items are not included in the sales price on which the tax is
computed.
2. If a motor vehicle is
leased or rented for one year or more, and if the amount charged includes
charges for insurance, motor vehicle excise, and registration fee which are not
separately stated, the sales price on which the tax is computed for each period
is reduced by 20%. The preceding sentence does not apply to finance leasing
arrangements.
3. If a motor vehicle
is leased or rented for one year or more, and if the amount charged includes
charges for fuel, insurance, motor vehicle excise, and registration fee which
are not separately stated, the sales price on which the tax is computed for
each period is reduced by 30%. The preceding sentence does not apply to finance
leasing arrangements.
4. All other
lease or rental arrangements are governed by the general rule in 830 CMR
64H.25.1(9)(a).
(b) If a
vehicle which has been leased or rented is sold or transferred by a lessor, the
sale or transfer is subject to the use tax under M.G.L. c. 64I, § 2 and
830 CMR 64H.25.1.
(c)
Examples. The following examples illustrate the
application of 830 CMR 64H.25.1(9):
Example 1: R&R Motors, a leasing
company, purchases a Cadillac for leasing in the regular course of business.
R&R Motors leases the Cadillac to P under a two year contract under which P
is obligated to pay $500 per month. Included in the monthly charge are the
following: insurance (personal liability, property, fire, theft, and
collision), $70; motor vehicle excise tax, $34; and registration, $1. R&R
Motors separately states its charges for insurance, excise tax and
registration. In this example, it will collect $19.75 in sales tax per month
($500 minus $105 x 5%) from P, in addition to the $500 leasing charge.
Example 2: The facts are the same as
in Example 1, above, except that R&R Motors does not separately state the
charges for insurance, excise tax and registration. In this example, it will
collect $20 in sales tax per month ($500 x 80% x 5%) from P, in addition to the
$500 leasing charge.
(10)
Use of exempt vehicles by
dealers and lessors.
(a)
General Rule. The sale of a motor vehicle, trailer, or
other vehicle to a Massachusetts dealer or Massachusetts lessor who purchases
the vehicle for resale in the regular course of business is exempt from the
sales and use tax. During the period in which the vehicle is held for resale,
the dealer or lessor may use it for demonstration or display, without incurring
liability for sales or use tax. However, if the dealer or lessor uses the
vehicle for any purpose other than resale in the regular course of business, a
use tax must be paid to the Commissioner. The tax is computed on the cost of
the vehicle to the dealer or lessor which includes the cost of any and all
accessories installed by the dealer or lessor, subject to the following
rules:
(b)
Rules for
dealers.
1. If the vehicle is
registered with the Registrar, the use tax is computed and paid in a single
payment pursuant to the applicable rules 830 CMR 64H.25.1(4) and (5).
2. If the vehicle is not registered with the
Registrar, the dealer may elect one of two methods of payment, as follows:
a. the dealer may pay the use tax in a single
payment pursuant to the applicable rules of 830 CMR 64H.25.1(4) and (5); or
b. the dealer may pay a monthly
use tax of 5% for each vehicle used computed on 3% of the cost of the vehicle.
If the dealer elects this method of payment, the dealer must file each month
with the Commissioner a Sales and Use Tax Return (Department of Revenue Form
ST-9M), along with payment of the monthly tax.
(c)
Rules for
lessors. If a lessor is required to pay a use tax under the
general rule of 830 CMR 64H.25.1(10)(a), the lessor must pay the tax in a
single payment pursuant to the applicable rules of 830 CMR 64H.25.1(4) and
(5).
(d)
Use of
"Dealer" or "Repair" license plates. A motor vehicle, trailer, or
other vehicle bearing a "Dealer" license plate issued by the Registrar pursuant
to M.G.L. c. 90, may be used only for demonstration or display. A motor
vehicle, trailer, or other vehicle bearing "Repair" license plates issued by
the Registrar pursuant to M.G.L. c. 90, may be used only if the vehicle is
being repaired, altered, equipped, or being transferred for repairs,
alteration, or equipment. The use by a dealer or lessor of a vehicle bearing
"Dealer" or "Repair" license plates in any manner other than the purposes
stated in 830 CMR 64H.25.1(10)(d), is a use other than for resale in the
regular course of business, and is subject to the use tax pursuant to the rules
of 830 CMR 64H.25.1(10).
(e)
Trade-ins by dealers and lessors. If a dealer or
lessor is required to pay a use tax on the cost of a vehicle pursuant to the
rules of 830 CMR 64H.25.1(10), the cost of the vehicle to the dealer or lessor
may not be reduced by any amount credited toward the cost by reason of a
trade-in.
(f)
Examples. The following examples illustrate the
provisions of 830 CMR 64H.25.1(10):
Example 1: The cost to Able Motors,
Inc. for every vehicle which it purchases for resale is $6,000, which amount
includes the accessories it installs in each vehicle. Each year the president
of Able Motors, Inc. takes one of the vehicles which was purchased for resale
and uses it for personal purposes. The vehicle is registered in the name of
Able Motors, Inc. Able Motors, Inc. must pay a use tax each year for the
vehicle which it registers for the president's personal use. The tax is
computed and paid pursuant to 830 CMR 64H.25.1(4) and (5).
Example 2: The facts are the same as
in the previous example, but in addition to the president, the salespeople who
are employed by Able Motors, Inc. are permitted to use ten demonstration
vehicles for various company errands unrelated to customer demonstration. Each
of these vehicles bears a "Dealer" plate. Able Motors, Inc. must pay a use tax
on each of these vehicles. It may compute the use tax at the rate of 5% of its
cost for each vehicle (5% x $6,000) and pay a use tax of $300 for each of the
ten vehicles, or it may elect to pay a monthly tax for each vehicle so used
computed at the rate of 5% multiplied by 3% of its cost of the vehicle. If it
elects this method of payment it must file a Sales Tax Return (Form ST-9M) and
pay a use tax each month of $90 (5% x 3% x $6,000 x
10).
(11)
Off-road and other vehicles.
(a)
General Rule.
For the purpose of computing and paying the tax under M.G.L. c. 64H,
§§ 3(c) and 26, and M.G.L. c. 64I, §§ 4 and 27, and 830 CMR
64H.25.1(4) and (5), the term "motor vehicle" means a vehicle designed for use
and used primarily for transportation or travel on public highways. Off-road
vehicles such as crawler tractors, front end loaders, cranes, and similar or
other off-road vehicles are not motor vehicles or trailers under 830 CMR
64H.25.1(11)(a).
(b)
Sales by dealers and lessors. Upon the retail sale of
an off-road or other vehicle which is not a motor vehicle or trailer as defined
in 830 CMR 64H.25.1(11)(a), by a Massachusetts dealer or Massachusetts lessor
in the regular course of business, the tax is paid to the dealer or lessor. No
reduction from the sales price for an amount credited toward the sales price as
a trade-in is allowed.
(c)
Casual and isolated sales or transfers. The casual and
isolated sale or transfer of an off-road or other vehicle which is a motor
vehicle or trailer under 830 CMR 64H.25.1(2), is subject to the use tax. The
casual and isolated sale or transfer of an off-road or other vehicle which is
not a motor vehicle or trailer as defined in 830 CMR 64H.25.1(2), is exempt
from the sales and use tax.
(12)
Refunds of tax for rescinded
and void sales.
(a)
General Rule. The Commissioner shall refund the sales
or use tax paid on a motor vehicle, trailer, or other vehicle if the sale of
the vehicle is rescinded, or if the sale of the vehicle is void at law, subject
to the following rules.
(b)
Rescinded Sales. The purchaser must return the motor
vehicle to the seller within 180 days from the date of sale and must receive
the full consideration paid for the motor vehicle in cash or credit, less the
seller's established handling fees, if any, before claiming a refund;
or
(c)
Sales void at
law. The sale must be void at law because the seller did not have
lawful title to or ownership of the vehicle at the time of the sale;
and
(d) The purchaser must timely
file with the Commissioner an Application for Abatement (Department of Revenue
Form CA-6) pursuant to M.G.L. c. 62C, § 37, and the regulations thereunder
(830 CMR 62C.37.1:
Abatements.)
(13)
Record-keeping requirements.
(a)
General Rule.
Every person who sells, transfers, purchases, stores, uses, or otherwise
consumes a motor vehicle, trailer, or other vehicle subject to the provisions
of M.G.L. c. 64H or c. 64I and 830 CMR 64H.25.1, must retain copies of all
returns, forms, records, and other documents pursuant to State Tax
Administration Regulation
830 CMR
62C.25.1: (Record Retention).
(b) The provisions of 830 CMR 64H.25.1(13),
are in addition to any other record-keeping requirements imposed by M.G.L. c.
62C or any other law, or established by the Commissioner.
(14)
Interest and other
penalties.
(a)
General Rule. The provisions of M.G.L. c. 62C relating
to interest and penalties are applicable to any failure to pay the tax imposed
by M.G.L. c. 64H or c. 64I and 830 CMR 64H.25.1.
(b)
Suspension and revocation of
Vendor's Registration Certificates. Any Massachusetts dealer or
Massachusetts lessor who fails to pay any tax required from such dealer or
lessor under the provision of M.G.L. c. 64H or c. 64I and 830 CMR 64H.25.1, may
be subject to suspension and revocation of its Massachusetts Vendor's
Registration Certificate (Form ST-1).
(c)
Criminal
penalties. The criminal penalties for evasion of tax provided in
M.G.L. c. 62C are applicable to the tax imposed by M.G.L. c. 64H and c. 64I and
830 CMR 64H.25.1.
(d)
Other penalties. The provisions of 830 CMR
64H.25.1(14), are in addition to any other penalties imposed by law or
established by the Commissioner.
(15)
Department of Revenue
guidelines, etc.
(a)
General Rule. Pursuant to the Commissioner's statutory
authority, the Commissioner may establish, and from time to time revise,
written guidelines, procedures, and other documents described in State Tax
Administration Regulation
830 CMR
62C.3.1: Department of Revenue Public Written
Statements, as may be necessary for the proper and efficient administration and
enforcement of M.G.L. c. 64H and c. 64I and 830 CMR 64H.25.1. Such guidelines,
procedures, and other documents shall be supplemental to and not inconsistent
with the provision of those statutes and 830 CMR 64H.25.1.
(b)
Distribution to dealers and
lessors. The Commissioner may distribute to Massachusetts dealers
and Massachusetts lessors written guidelines, procedures, and other documents
which describe and explain M.G.L. c. 64H and c. 64I and 830 CMR 64H.25.1. The
Commissioner may require Massachusetts dealers and Massachusetts lessors to
provide such written guidelines, procedures, and other documents to purchasers
of motor vehicles and trailers at the time of sale.
(16)
Use of Motor Vehicles by
Limousine Businesses.
(a)
General Rule. A limousine business will be required to
pay sales tax on its purchases of limousines. The furnishing of limousines
driven by employees of the limousine business is a transportation service
exempt from sales tax. This rule applies to transactions on or after June 30,
1988, the operational date of this section, 830 CMR 64H.25.1(16).
(b)
Definitions. For
the purposes of this section, 830 CMR 64H.25.1(16), the following terms have
the following meanings:
Customer, a person or entity who
engages a limousine business to provide transportation.
Employee, any person who is at least
temporarily under the direct control and supervision of another person.
Limousine business, a business that
generally provides transportation in motor vehicles driven by chauffeurs who
are employees of the business.
(c)
Purchases of motor vehicles
by limousine businesses.
1.
Purchases of motor vehicles for resale and lease.
a. The purchase of a limousine or other motor
vehicle is exempt under 830 CMR 64H.25.1(7)(b), the exemption for sales and
purchases for resale, only if the limousine is used exclusively for resale,
lease, or rental. See 830 CMR 64H.25.1(7)(b)1.
b. Limousine businesses generally do not
resell, lease, or rent their limousines to their customers.
2. Limousine businesses to pay
sales tax upon registration. Limousine businesses will pay sales tax on their
purchases of limousines upon registration, calculated at 5% of the purchase
price of the limousines.
(d)
Limousine businesses and the
furnishing of transportation services.
1. Under M.G.L. c. 64H, § 1(13)(b),
transportation services are not subject to Massachusetts sales and use
tax.
2. If the customer of a
limousine business hires a limousine to be driven by an employee of the
limousine business, the transaction is a nontaxable transportation
service.
3. If the customer of a
limousine business hires a limousine to be driven by the customer, the
transaction is a taxable rental of tangible personal property.
4. The occasional or incidental taxable
rental of a limousine by a limousine business to a customer does not alter the
requirement that the limousine business pay sales tax on its purchases of
limousines upon registration.
(e)
Limousine businesses to be
removed from current listing of Massachusetts lessors. The
Commissioner will require all limousine businesses to identify themselves as
limousine businesses under procedures to be announced by the Department, in
accord with 830 CMR 64H.25.1(15). The Commissioner will remove limousine
businesses from the current list of Massachusetts lessors described in 830 CMR
64H.25.1(7)(b)5.
