Massachusetts Court Rules Out-of-State Tire Vendor Has No Obligation to Collect Massachusetts Use Tax
| Massachusetts Court Rules Out-of-State Tire Vendor Has No Obligation to Collect Massachusetts Use Tax |
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The Massachusetts Supreme Judicial Court held that a New Hampshire tire seller is not required to collect Massachusetts use tax on sales of tires to Massachusetts residents where the customers purchased and took delivery of the tires outside Massachusetts. There was no evidence of actual use of the tires in Massachusetts and there is no Massachusetts statutory presumption of use in Massachusetts where personal property is sold to a Massachusetts resident outside Massachusetts, even where the goods purchased out of state may be affixed to property registered in Massachusetts. (Town Fair Tire Centers, Inc. v. Commr. of Rev., Mass. Supreme Judicial Court, Dkt. No. SJC-10360, 08/25/2009, rev'g ATB, Dkt. No. C280607, 06/09/2008.) Tires sold in New Hampshire to Massachusetts residents. The taxpayer sells and installs tires at its stores in New England, including Massachusetts and New Hampshire. It collected and remitted Massachusetts sales tax on tire sales at its Massachusetts stores but did not collect Massachusetts use tax on sales to Massachusetts residents at its stores outside Massachusetts. The Massachusetts Department of Revenue auditor identified invoices from the taxpayer's New Hampshire stores that listed Massachusetts addresses and telephone numbers, and certain invoices paid by check that had the purchaser's Massachusetts driver's license. The Appellate Tax Board, which upheld the Commissioner, found that based on the purchaser's Massachusetts addresses, telephone numbers and driver's license information contained in the invoices, the tires were installed in vehicles owned or operated by Massachusetts residents and that the Commissioner properly assessed use tax in connection with those sales. Use in Massachusetts is a prerequisite. The Massachusetts Supreme Judicial Court, reversing the Board, ruled that a New Hampshire tire seller is not obligated to collect use tax because there was no evidence that the tires sold were actually used in Massachusetts. Mass. Gen. L. § 4 imposes no obligation on a vendor to collect use tax unless and until the storage, use or consumption of tangible personal property occurs in Massachusetts either at the time of sale or at some later point. The court found as untenable the Board's conclusion that evidence of actual use or storage in Massachusetts is not required because the liability for the use tax arises at the time of the purchase if the purchaser's intent is to use the property in Massachusetts and the use tax is properly imposed if the purchaser intended to use the tires in Massachusetts at the time of purchase. Such conclusion was not supported by statutory language. Use in Massachusetts is a necessary prerequisite. No statutory presumption of use in Massachusetts. The Court further held that there is no Massachusetts statutory presumption of use in Massachusetts where personal property is sold to a Massachusetts resident outside Massachusetts, even where the goods purchased out of state may be affixed to property registered in Massachusetts. The court noted that the absence of a statutory presumption that a vendor's knowledge that a purchaser is a resident of Massachusetts will permit a finding that the goods purchased out of state were purchased for use in Massachusetts is significant because other states have enacted such a presumption. Massachusetts could enact such a presumption, but in the absence of any such statutory authorization, no presumption exists. |
