Massachusetts and Exempt Governmental Bodies
- Oct 26, 2012 | Gail Cole
A recent letter ruling by the Massachusetts Department of Revenue reveals that if a taxpayer is acting as an agent of an exempt governmental body and is contractually obligated to turn tangible personal property over to that exempt entity, the sales of that tangible personal property are not subject to sales and use tax.
Letter Ruling 12-12 regards construction progress photographs taken by an engineering photography company. This company was hired as a subcontractor by a general contractor working on a project for the Massachusetts Department of Transportation (MassDOT).
The subcontractor delivers printed construction progress photographs to the general contractor on a monthly basis, and invoices for those photographs. The general contractor is required "per contract" to "provide MassDOT with the construction progress photographs."
Pursuant to Massachusetts General Laws Chapter 64H § 6:
"The following sales and the gross receipts therefrom shall be exempt from the tax imposed by these chapter:--... (d) Sales to the United States, the commonwealth or any political subdivision thereof, or their respective agencies."
Since the photographs ultimately become the property of the Massachusetts Department of Transportation, which is an exempt government body, sales of the photographs are exempt from Massachusetts sales tax.
Form ST-5C must be properly completed before the exemption may be allowed.