Code of Massachusetts Regulations
830 CMR - DEPARTMENT OF REVENUE
Title 830 CMR 64H.00 - Sales and Use Tax
Section 64H.6.1 - Casual and Isolated Sales

(a) Purpose. 830 CMR 64H.6.1 describes the application of the Massachusetts sales and use tax to casual and isolated sales made by persons, groups, for-profit, and nonprofit organizations, and persons, groups, or organizations acting through or on their behalf. It also deals with the taxation of sales made to them. 830 CMR 64H.6.1 will apply retroactively to all open tax years.

(b) Outline of Topics. This regulation is organized as follows:

(a) The sales or use tax does not apply to casual and isolated sales made by a person, group, or organization not regularly engaged in the business of selling tangible personal property. The casual and isolated sales exemption set forth in M.G.L. c. 64H, § 6(c) may apply to sales by a person, group or organization engaged in the business of making sales of tangible personal property, if the sales are of a type of property not ordinarily sold in the regular course of the person's, group's or organization's business. See, e.g.,830 CMR 64H.6.1(7)(a)5. The use tax, however, does apply to the casual and isolated sale of a motor vehicle or trailer as defined in M.G.L. c. 90, § 1, or of a boat or airplane where the purchaser is not the spouse, parent, brother, sister, or child of the seller.

(b) Items not purchased for resale in the regular course of business are generally taxable. Whether or not the purchase of such property was taxable, any person, group, or organization may later make casual and isolated sales of such property. So long as the property sold at such sales was not originally acquired for resale, the number of these sales in a calendar year is immaterial.

(c) Sales to government organizations are exempt under M.G.L. c. 64H, § 6(d).

(d) Under M.G.L. c. 64H, § 6(e), sales to nonprofit organizations which are exempt from taxation under the Internal Revenue Code § 501(c)(3) or sales to nonprofit organizations that are in the process of obtaining exemption under § 501(c)(3), but have not yet obtained certification from the Internal Revenue Service (hereinafter "§ 501(c)(3) organizations") are exempt from sales tax if the following rules are met.

(e) Sales to persons, groups, or organizations not described in 830 CMR 64H.6.1(3)(c) or (d) are generally taxable, regardless of whether the property is to be used for fundraising, unless exempt under some other provision of law.

(f) Sales to persons, groups, or organizations acting through or on behalf of entities described in 830 CMR 64H.6.1(3)(c) or (d) are also exempt from taxation on purchases made through or on behalf of the exempt entity, provided that the substantiation requirements of 830 CMR 64H.6.1(6)(b) or (d) are met.

(a) Sales of tangible personal property by a government organization for fundraising purposes are exempt from sales tax as casual and isolated sales if the organization does not make sales in the regular course of business of the same type of property. Sales of tangible personal property by a nonprofit organization for fundraising purposes are exempt from sales tax as casual and isolated sales if:

(b) The Commissioner will generally presume that amounts derived from the sale of tangible personal property purchased for fundraising activities are used to further the organization's exempt purpose.

(a) Whether the organization conducts sales from a retail establishment that it operates, as defined in 830 CMR 64H.6.1.

(b) Whether the organization is required to hold a vendor's registration certificate pursuant to M.G.L. c. 64H, § 7, and is ordinarily engaged in making sales of the same type of property that it sells in its fundraising events.

(c) Whether the proceeds from sales of meals or tangible personal property constitute unrelated business income within the meaning of applicable Internal Revenue Code provisions and the regulations promulgated thereunder.

(a) Sales Directly to Government Organizations. Government organizations are encouraged to obtain a Certificate of Exemption (Form ST-2) and submit to the vendor a properly executed Exempt Purchaser Certificate (Form ST-5) and a copy of its Form ST-2, if available, when making exempt purchases. Vendors must retain forms in the same manner as other sales tax records. See 830 CMR 62C.25.1: Record Retention for further recordkeeping requirements. If the government organization does not present Form ST-5, the vendor must maintain other adequate documentation verifying that the purchaser is exempt, e.g., a copy of the organization's check or credit card.

(b) Sales to Entities Purchasing through or on Behalf of Government Organizations. Entities purchasing through or on behalf of government organizations must certify that they are doing so by presenting a properly executed Form ST-5 when making such purchases. Form ST-5 may be made out by the exempt organization or the purchaser, but must contain the name, address, and, if available, the exemption number of the government organization on whose behalf purchases are made, as well as a description of the property purchased. At the time of purchase, the purchaser must attach to the Form ST-5 submitted to the vendor, a copy of the government organization's Form ST-2 if it is available. Vendors must retain forms in the same manner as other sales tax records. See 830 CMR 62C.25.1: Record Retention for further recordkeeping requirements.

(c) Sales Directly to Organizations Exempt under I.R.C. § 501(c)(3). A § 501(c)(3) organization must first obtain a Form ST-2 (or temporary certification: see TIR 96-9) from the Commissioner certifying that it is entitled to exemption under M.G.L. c. 64H, § 6(e). When making purchases these organizations must submit to the vendor a copy of their Form ST-2 attached to a properly executed Form ST-5. Vendors must retain both forms in the same manner as other sales tax records. See 830 CMR 62C.25.1: Record Retention for further recordkeeping requirements.

(d) Sales to Entities Purchasing through or on Behalf of Organizations Exempt under I.R.C. § 501(c)(3). Entities purchasing property through or on behalf of organizations exempt under I.R.C. § 501(c)(3) must submit to the vendor a copy of the organization's Form ST-2 attached to a properly executed Form ST-5 from the organization on whose behalf it is making purchases. Vendors must retain both forms in the same manner as other sales tax records. See 830 CMR 62C.25.1: Record Retention for further recordkeeping requirements.

The provisions of 830 CMR 64H.6.1(6)(b) and (d) are illustrated by the following example:

Every year, the parent teacher organizations (PTO) at two different high schools conduct a "Spring Fling" for fundraising purposes to benefit their school. Each PTO hires a band, purchases flowers, and contracts with a local hotel for a banquet hall and the provision of 100 meals. Additionally, the PTO reserves a block of 30 rooms at the hotel for parents.

One high school in this example is a public school in Boston (Public High). The PTO for Public High holds no exemption itself, but would like to avail itself of the exemption which would be available to Public High under M.G.L. c. 64H, § 6(d) had Public High purchased the property directly. In order to substantiate a claim of exemption under M.G.L. c. 64H, § 6(d), Public High PTO must submit to the vendor a properly executed Form ST-5 and must attach a copy of Public High's Form ST-2 if the Form ST-2 is available. If Public High does not present these forms to PTO, the PTO may itself fill out the appropriate sections of Form ST-5 and submit the form to vendors when making purchases through or on behalf of Public High.

The other high school is a local non-governmental high school (Private High) that has § 501(c)(3) status. The PTO for Private High does not itself have § 501(c)(3) status, but would like to avail itself of the exemption which would be available to Private High under M.G.L. c. 64H, § 6(e) had Private High purchased the property directly. In order to substantiate a claim of exemption under M.G.L. c. 64H, § 6(e), Private High PTO must submit to the vendor a properly executed and signed Form ST-5 and must attach a copy of Private High's Form ST-2 or temporary Form ST-2. If the PTO itself has applied for and received § 501(c)(3) status, the substantiation requirements in 830 CMR 64H.6.1(6)(c) apply.

Generally, if a customer rents a room for the purpose of serving a meal and the meal is provided by the operator of the room, the charge for the room is subject to sales tax whether or not the charge for the room is separately stated from the charge for the meal. See 830 CMR 64H.6.5(7)(b)2. Here, however, the rental of the banquet hall is exempt as a sale to an entity purchasing through or on behalf of an organization exempt under I.R.C. § 501(c)(3) or an entity purchasing through or on behalf of a government organization.

The rental of the 30 rooms in this example for sleeping and living purposes is subject to the Room Occupancy Excise under M.G.L. c. 64G, § 1. There is no exemption for room rentals under M.G.L. c. 64G corresponding to the exemption under the sales tax statute for purchases by governmental and § 501(c)(3) organizations and entities purchasing through or on their behalf.

(e) The substantiation requirements of 830 CMR 64H.6.1(6) are in addition to any other recordkeeping requirements imposed by law.

(a) Exempt casual and isolated sales by persons, groups, or organizations.

(b) Sales that are not casual and isolated.

(a) Any person, group, or organization, including § 501(c)(3) organizations certified by the Commissioner as exempt, making sales of tangible personal property in the regular course of business must register as a Massachusetts vendor and collect and remit sales taxes whether or not the property is to be sold at fundraising events. The person, group, or organization should present a resale certificate to its vendors when it purchases property for resale.

(b) Nonprofit organizations and government organizations making sales of tangible personal property for fundraising purposes in casual and isolated sales need not register as vendors with the Commissioner and collect sales tax.