830 CMR, § 64H.8.1

Current through Register 1533, October 25, 2024

Section 64H.8.1 - Resale and Exempt Use Certificates

(1)Statement of Purpose, Effective Date, Outline of Topics.

(a)Statement of Purpose. The purpose of 830 CMR 64H.8.1 is to explain the requirements for the presentation and acceptance of resale certificates for sales of tangible personal property and taxable services, the requirements for the presentation and acceptance of exempt use certificates for sales of tangible personal property, and the rules for determining when sales of property or taxable services are sales for resale.

(b)Effective Date. 830 CMR 64H.8.1 applies to the sale or use of tangible personal property and taxable services, except gas, steam, electricity, heating fuel or taxable services sold or used before September 1, 1990. However, 830 CMR 64H.8.1(4)(d) and 830 CMR 64H.8.1(5)(d) are effective as of March 6, 1991.

(c)Outline of Topics. 830 CMR 64H.8.1 is organized as follows:

1. Statement of Purpose, Effective Date, Outline of Topics.

2. Definitions.

3. General Rule.

4. Sales for Resale.

5. Sales for Exempt Use.

(2)Definitions. For the purpose of 830 CMR 64H.8.1, the following terms have the following meanings, unless the context requires otherwise:

Commissioner. The Commissioner of Revenue or the Commissioner's duly authorized representative.

Exempt Use Certificate, Form ST-12. A certificate, prescribed by the Commissioner, certifying that tangible personal property is purchased for a use exempt under M.G.L. c. 64H, § 6(r) or (s).

Resale Certificate, Form ST-4. A certificate prescribed by the Commissioner, certifying that taxable services or tangible personal property are purchased for resale in the regular course of business.

Retail Sale. A sale for any purpose other than resale in the regular course of business.

Tangible Personal Property. Personal property of any nature consisting of any produce, goods, wares, merchandise, and commodities, including gas, steam, electricity, and heating fuel, but excluding rights and credits, insurance policies, bills of exchange, stocks, bonds, and similar evidences of indebtedness or ownership.

Tax. The excise tax imposed under M.G.L. c. 64H or M.G.L c. 64I.

Taxable Service or Taxable Services. Any activities engaged in by a person for consideration that are subject to the tax imposed by M.G.L. c. 64H or M.G.L c. 64I, whether or not such activities are the primary activity of the person providing the service. Taxable services are limited to telecommunications services.

Telecommunications Services, any transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite, or similar facilities, but not including cable television. See830 CMR 64H.1.6, Telecommunications Services.

Vendor, a retailer or other person selling taxable services or tangible personal property the gross receipts from the retail sale of which are required to be included in the measure of the tax imposed by M.G.L. c. 64H or c. 64I.

(3)General Rule. All gross receipts of a vendor from the sale of tangible personal property or taxable services are presumed to be from retail sales subject to tax until the contrary is established. The burden of proving that a sale is not a retail sale is on the vendor unless the vendor takes a resale certificate from the purchaser, under the conditions of M.G.L. c. 64H, § 8; M.G.L. c. 64I, § 8 and 830 CMR 64H.8.1(4). The burden of proving that a sale is exempt under M.G.L. c. 64H or c. 64I is on the vendor unless the vendor takes an exempt use certificate from the purchaser, under the conditions of M.G.L. c. 64H, § 8; M.G.L. c. 64I, § 8, and 830 CMR 64H.8.1(5).

(4)Sales of Tangible Personal Property and Taxable Services for Resale.

(a)Presumptions and burdens of proof.

1. Sales tax. The burden of proving that a sale of tangible personal property or taxable services is not a retail sale is on the vendor unless the vendor accepts a resale certificate from the purchaser, under the conditions of M.G.L. c. 64H, §§ 8(a) through (d), and 830 CMR 64H.8.1.

2. Use tax. Tangible personal property that the purchaser accepts within Massachusetts or that the vendor or a licensed carrier on behalf of the vendor delivers to the purchaser within Massachusetts is presumed to be sold for use, storage, or other consumption in Massachusetts until the contrary is established. The burden of proving the contrary is on the vendor unless the vendor accepts a resale certificate from the purchaser, under the conditions of M.G.L. c. 64I, §§ 8(a)-(e), and 830 CMR 64H.8.1.

(b)Good faith requirement for resale certificates. A resale certificate relieves a vendor from the burden of proving that a sale of tangible personal property or taxable service is not a retail sale only if the vendor accepts the resale certificate in good faith from a purchaser who is engaged in the business of selling tangible personal property or taxable services, and who, at the time of the purchase, intends to sell the tangible personal property or taxable service in a retail sale in the regular course of business or is unable to ascertain at the time of purchase whether the tangible personal property or taxable service will be sold or will be used for some other purpose.

(c)Requirements for proper resale certificates. Each resale certificate must be in the form prescribed by the Commissioner and must contain the following information:

1. Name of purchaser;

2. Address of purchaser;

3. Purchaser's registration number;

4. Any other information the Commissioner may require.

(d)60-day rule for production and correction of resale certificates. The rules below apply to resale certificates for sales of tangible personal property and resale certificates for sales of taxable services.

1. Commissioner's notice to produce resale certificates.

a. Upon written notice to a vendor, the Commissioner may require the vendor to produce particular resale certificates accepted during any period for which a tax return has been filed or for which a return is due. The vendor must make the requested resale certificates available for inspection by the Commissioner within 60 days of the date of the Commissioner's notice.

b. If the vendor does not produce the requested resale certificates within the 60-day period, the vendor must carry the burden of proving, by other evidence, that the sale was not a retail sale subject to tax.

c. If the vendor, within the 60 days of the original notice, produces any requested resale certificates that the Commissioner then determines are deficient in some material manner, the vendor must correct such resale certificates within the same 60-day period, calculated from the date of the original notice.

2. Commissioner's notice to correct resale certificates.

a. If the Commissioner notifies any vendor in writing that a resale certificate not previously subject to the 60-day rule for production is deficient in some material manner, the vendor must correct the resale certificate within 60 days from the date of the Commissioner's notice.

b. If the vendor does not correct the particular resale certificate within the 60-day period, the vendor must carry the burden of proving, by other evidence, that the sale was not a retail sale subject to tax.

(e)Use of tangible personal property or taxable services by purchasers. If a purchaser presents a resale certificate with respect to the purchase of tangible personal property or a taxable service and subsequently makes any use of the property or service, other than retention, demonstration, or display while holding it for sale in the regular course of business, the use is deemed to be a retail sale by the purchaser as of the time the property or service is first used by the purchaser, and the cost of the property or service to the purchaser must be included in the purchaser's gross receipts.

(f)Special Requirements for Presentation of Resale Certificates for Purchases of Telecommunications Services. For rules regarding the use of resale certificates in connection with purchases of telecommunications services, see 830 CMR 64H.1.6 (Telecommunications Services).

(5)Sales for Exempt Use.

(a)Acceptance of exempt use certificates. If a purchaser purchases tangible personal property for a purpose that qualifies for exemption from the tax under M.G.L. c. 64H, or M.G.L. c. 64I, the purchaser may present an exempt use certificate to the vendor to certify that the tangible personal property will be used in an exempt manner. The burden of proving that a sale of tangible personal property is exempt under M.G.L. c. 64H or M.G.L. c. 64I is on the vendor unless the vendor accepts an exempt use certificate from the purchaser, under the conditions of M.G.L. c. 64H, §§ 8(e) through (h); M.G.L. c. 64I, §§ 8(g) through (j), and 830 CMR 64H.8.1. A purchaser may not present, and a vendor may not accept, an exempt use certificate for a purchase of taxable services.

(b)Good faith requirement for exempt use certificates. An exempt use certificate relieves the vendor from the burden of proof that a sale of tangible personal property is for exempt use only if the vendor accepts the certificate in good faith from a purchaser who, at the time of purchasing the tangible personal property, intends to use the property in a manner that qualifies for an exemption under M.G.L. c. 64H, or M.G.L. c. 64I, or who is unable to ascertain at the time of purchase whether the tangible personal property will be used in an exempt manner or will be used for some other purpose.

(c)Requirements for proper exempt use certificates. Each exempt use certificate must be in the form prescribed by the Commissioner and must contain the following information:

1. Name of purchaser;

2. Address of purchaser;

3. Purchaser's registration number, if any;

4. The general character of the tangible personal property purchased;

5. Certification of the exempt use to which the tangible personal property will be applied; and

6. Any other information the Commissioner may require.

(d)60-day rule for production and correction of certificates. The rules below apply to exempt use certificates for sales of tangible personal property.

1. Commissioner's notice to produce certificates.

a. Upon written notice to a vendor, the Commissioner may require the vendor to produce particular exempt use certificates accepted during any period for which a tax return has been filed or for which a return is due. The vendor must make the requested exempt use certificates available for inspection by the Commissioner within 60 days of the date of the Commissioner's notice.

b. If the vendor does not produce the requested certificates within the 60-day period, the vendor must carry the burden of proving, by other evidence, that the sale was not a retail sale subject to tax.

c. If the Commissioner determines that any of the produced certificates are deficient in some material manner, the vendor must correct the certificates within the same 60-day period, calculated from the date of the original notice.

2. Commissioner's notice to correct certificates.

a. If the Commissioner notifies any vendor in writing that a certificate not previously subject to the 60-day rule for production is deficient in some material manner, the vendor must correct the certificate within 60 days from the date of the Commissioner's notice.

b. If the vendor does not correct the particular certificates within the 60-day period, the vendor must carry the burden of proving, by other evidence, that the sale was not a retail sale subject to tax.

(e)Nonexempt use of tangible personal property by purchaser. If a purchaser who presents an exempt use certificate for the purchase of tangible personal property makes any use of property other than a use that is exempt under M.G.L. c. 64H or M.G.L. c. 64I, the use is deemed to be a retail sale by the purchaser as of the time the service is first used by the purchaser, and the cost of the tangible personal property to the purchaser must be included in the purchaser's gross receipts.

(f)Sales of taxable services. None of the exempt use provisions of M.G.L. c. 64H or M.G.L. c. 64I apply to sales of taxable services. Therefore, a purchaser may not present, and a vendor may not accept, an exempt use certificate with respect to a sale of a taxable service.

830 CMR, § 64H.8.1

Amended by Mass Register Issue 1386, eff. 12/20/2018.