SECTION 1: Section 1 of Chapter 64H of the General Laws, as so appearing, is hereby amended by striking it out in its entirety and inserting in its place the following new section 1:
As used in this chapter and chapter 64I the following words shall have the following meanings:
"Alcoholic Beverages" means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume.
"Bundled transaction" is the retail sale of two or more products, except real property and services to real property, where (1) the products are otherwise distinct and identifiable, and (2) the products are sold for one non-itemized price. A "bundled transaction" does not include the sale of any products in which the "sales price" varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
(A) "Distinct and identifiable products" does not include:
1. Packaging - such as containers, boxes, sacks, bags, and bottles or other materials such as wrapping, labels, tags, and instruction guides that accompany the "retail sale" of the products and are incidental or immaterial to the "retail sale" thereof. Examples of packaging that are incidental or immaterial include grocery sacks, shoeboxes, dry cleaning garment bags and express delivery envelopes and boxes.
2. A product provided free of charge with the required purchase of another product. A product is "provided free of charge" if the "sales price" of the product purchased does not vary depending on the inclusion of the product "provided free of charge."
3. Items included in the definition of "sales price" in G.L. c. 64H, § 1.
(B) The term "one non-itemized price" does not include a price that is separately identified by product on binding sales or other supporting sales-related documentation made available to the customer in paper or electronic form including, but not limited to an invoice, bill of sale, receipt, contract, service agreement, lease agreement, periodic notice of rates and services, rate card, or price list.
(C) A transaction that otherwise meets the definition of a "bundled transaction" as defined above, is not a "bundled transaction" if it is:
(1) The "retail sale" of tangible personal property and a service where the tangible personal property is essential to the use of the service, and is provided exclusively in connection with the service, and the true object of the transaction is the service; or
(2) The "retail sale" of services where one service is provided that is essential to the use or receipt of a second service and the first service is provided exclusively in connection with the second service and the true object of the transaction is the second service; or
(3) A transaction that includes taxable products and nontaxable products and the "purchase price" or "sales price" of the taxable products is de minimis.
(a) De minimis means the seller's "purchase price" or "sales price" of the taxable products is ten percent (10%) or less of the total "purchase price" or "sales price" of the bundled products.
(b) Sellers shall use either the "purchase price" or the "sales price" of the products to determine if the taxable products are de minimis. Sellers may not use a combination of the "purchase price" and "sales price" of the products to determine if the taxable products are de minimis.
Sellers shall use the full term of a service contract to determine if the taxable products are de minimis; or
(4) The "retail sale" of exempt tangible personal property and taxable tangible personal property where:
(a) The transaction includes "food and food ingredients", "drugs", "durable medical equipment", "mobility enhancing equipment", "over-the-counter drugs", "prosthetic devices" as defined in G.L. c. 64H, § 1, or medical supplies; and
(b) Where the seller's "purchase price" or "sales price" of the taxable tangible personal property is fifty percent (50%) or less of the total "purchase price" or "sales price" of the bundled tangible personal property. Sellers may not use a combination of the "purchase price" and "sales price" of the tangible personal property when making the fifty percent (50%) determination for a transaction.
“Business” means any activity engaged in by any person or caused to be engaged in by him with the object of gain, benefit or advantage, either direct or indirect.
"Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no refrigeration.
“Certified Automated System” means software certified by the Streamlined Sales Tax Governing Board to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit to the appropriate state, and maintain a record of the transaction.
“Certified Service Provider” means an agent certified by the Streamlined Sales Tax Governing Board to perform all of a seller’s sales and use tax functions, other than the seller’s obligation to remit tax on its own purchases.
"Clothing" means all human wearing apparel suitable for general use.
"Clothing accessories or equipment" means incidental items worn on the person or in conjunction with "clothing."
“Commissioner” means the commissioner of revenue.
"Computer" means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions.
"Computer software" means a set of coded instructions designed to cause a "computer" or automatic data processing equipment to perform a task.
"Delivered electronically" means delivered to the purchaser by means other than tangible storage media.
"Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing. The term “delivery charges” does not include “delivery charges” for “direct mail.”
If a shipment includes exempt property and taxable property, the seller should allocate the delivery charge by using:
A. A percentage based on the total sales prices of the taxable property compared to the total sales prices of all property in the shipment; or
B. A percentage based on the total weight of the taxable property compared to the total weight of all property in the shipment.
The seller must tax the percentage of the delivery charge allocated to the taxable property but does not have to tax the percentage allocated to the exempt property.
"Dietary supplement" means any product, other than "tobacco," intended to supplement the diet that:
(a) Contains one or more of the following dietary ingredients:
1.A vitamin;
2.A mineral;
3.An herb or other botanical;
4.An amino acid;
5.A dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or
6.A concentrate, metabolite, constituent, extract, or combination of any ingredient described in above; and
(b) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such a form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and
(c) Is required to be labeled as a dietary supplement, identifiable by the "Supplemental Facts” box found on the label and as required pursuant to 21 C.F.R § 101.36.
"Direct mail" means printed material delivered or distributed by United States mail or other delivery service to a mass audience or to addressees on a mailing list provided by the purchaser or at the direction of the purchaser when the cost of the items are not billed directly to the recipients. "Direct mail" includes tangible personal property supplied directly or indirectly by the purchaser to the direct mail seller for inclusion in the package containing the printed material. "Direct mail" does not include multiple items of printed material delivered to a single address.
"Drug" means a compound, substance or preparation, and any component of a compound, substance or preparation, other than "food and food ingredients," "dietary supplements" or "alcoholic beverages:"
(a)Recognized in the official United State Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, and supplement to any of them; or
(b)Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in human beings; or
Intended to affect the structure or any function of the body.
"Durable medical equipment" means equipment including repair and replacement parts for same, but does not include "mobility enhancing equipment," which:
(a)Can withstand repeated use; and
(b)Is primarily and customarily used to serve a medical purpose; and
(c) Generally is not useful to a person in the absence of illness or injury; and
(d) Is not worn in or on the body.
As used in this definition, “repair and replacement parts” does not include items which are for single patient use only.
"Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
“Engaged in business” means commencing, conducting or continuing in business, as well as liquidating a business when the liquidator thereof holds himself out to the public as conducting such a business.
“Engaged in business in the commonwealth” means having a business location in the commonwealth; regularly or systematically soliciting orders for the sale of services to be performed within the commonwealth or for the sale of tangible personal property for delivery to destinations in the commonwealth; otherwise exploiting the retail sales market in the commonwealth through any means whatsoever, including, but not limited to, salesmen, solicitors or representatives in the commonwealth, catalogs or other solicitation materials sent through the mails or otherwise, billboards, advertising or solicitations in newspapers, magazines, radio or television broadcasts, computer networks or in any other communications medium; or regularly engaged in the delivery of property or the performance of services in the commonwealth. A person shall be considered to have a business location in the commonwealth only if such person (i) owns or leases real property within the commonwealth; (ii) has one or more employees located in the commonwealth; (iii) regularly maintains a stock of tangible personal property in the commonwealth for sale in the ordinary course of business; or (iv) regularly leases out tangible personal property for use in the commonwealth. For the purposes of this paragraph, property on consignment in the hands of a consignee and offered for sale by the consignee on his own account shall not be considered as stock maintained by the consignor; a person having a business location in the commonwealth solely by reason of regularly leasing out tangible personal property shall be considered to have a business location in the commonwealth only with respect to such leased property; and an employee shall be considered to be located in the commonwealth if (a) his service is performed entirely within the commonwealth or (b) his service is performed both within and without the commonwealth but in the performance of his services he regularly commences his activities at, and returns to, a place within the commonwealth. “Within the commonwealth” means within the exterior limits of the commonwealth of Massachusetts, and includes all territory within said limits owned by, or leased or ceded to, the United States of America.
“Essential Clothing” means clothing with a sales price below $175.
"Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Food and food ingredients" does not include "alcoholic beverages", “candy”, “dietary supplements”, “soft drinks”, or "tobacco", as those terms are defined in this chapter.
"Food sold through vending machines” means food dispensed from a machine or other mechanical device that accepts payment.
“Fur clothing” means “clothing” that is required to be labeled as a fur product under the Federal Fur Products Labeling Act (15 U.S.C. § 69), and the value of the fur components in the product is more than three times the value of the next most valuable tangible component. “Fur clothing” is human wearing apparel suitable for general use.” For the purposes of the definition of “fur clothing” the term “fur” means any animal skin or part thereof with hair, fleece, or fur fibers attached thereto, either in its raw or processed state, but shall not include such skins that have been converted into leather or suede, or which in processing, the hair, fleece, or fur fiber has been completely removed.
"Grooming and hygiene products" are soaps and cleaning solutions, shampoo, toothpaste, mouthwash, antiperspirants, and sun tan lotions and screens, regardless of whether the items meet the definition of "over-the-counter-drugs."
"Gross receipts'' means the total sales price received by a seller as a consideration for retail sales, provided however that a seller may exclude from its gross receipts the amount charged for property returned by purchasers to sellers upon rescission of contracts of sale when the entire amounts charged therefore, less the sellers' established handling fees, if any, for such return of property, are refunded either in cash or credit, and when the property is returned within ninety days from the date of sale, and the entire sales tax paid is returned to the purchaser.
"Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend.
Lease or rental does not include:
1.A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments;
2.A transfer or possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price does not exceed the greater of one hundred dollars or one percent of the total required payments; or
3.Providing tangible personal property along with an operator for a fixed or indeterminate period of time. A condition of this exclusion is that the operator is necessary for the equipment to perform as designed. For the purpose of this subsection, an operator must do more than maintain, inspect, or set-up the tangible personal property.
Lease or rental does include agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined in 26 USC 770l(h)(1).
This definition shall be used for sales and use tax purposes regardless if a transaction is characterized as a lease or rental under generally accepted accounting principles, the Internal Revenue Code, the Uniform Commercial Code, or other provisions of federal, state or local law.
(d) This definition will be applied only prospectively from the date of adoption and will have no retroactive impact on existing leases or rentals.
"Load and leave" means delivery to the purchaser by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser.
"Mobility enhancing equipment" means equipment including repair and replacement parts to same which:
(a)Is primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle; and
(b)Is not generally used by persons with normal mobility; and
Does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer.
Mobility enhancing equipment does not include "durable medical equipment."
"Motion picture'', a feature-length film, a video, a digital media project, a television series defined as a season not to exceed 27 episodes, or a commercial made in the commonwealth, in whole or in part, for theatrical or television viewing or as a television pilot. The term "motion picture'' shall not include a production featuring news, current events, weather and financial market reports, talk show, game show, sporting events, awards show or other gala event, a production whose sole purpose is fundraising, a long-form production that primarily markets a product or service, or a production containing obscene material or performances.
"Motion picture production company'', a company including any subsidiaries engaged in the business of producing motion pictures, videos, television series, or commercials intended for a theatrical release or for television viewing. The term "motion picture production company'' shall not mean or include any company which is more than 25 per cent owned, affiliated, or controlled, by any company or person which is in default on a loan made by the commonwealth or a loan guaranteed by the commonwealth.
"Over-the-counter drug" means a drug that contains a label that identifies the product as a drug as required by 21 C.F.R. § 201.66. The "over-the-counter-drug" label includes:
(a)A "Drug Facts" panel; or
(b)A statement of the "active ingredient(s)" with a list of those ingredients contained in the compound, substance or preparation.
An over-the-counter drug does not include "grooming and hygiene products.”
"Person'', An individual, trust, estate, fiduciary, partnership, limited liability company, limited liability partnership, corporation, or any other legal entity.
"Prepared food" means:
(a)Food sold in a heated state or heated by the seller;
(b)Two or more food ingredients mixed or combined by the seller for sale as a single item; or
(c)Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used to transport the food.
"Prepared food" in section (b) of this definition does not include food that is only cut, repackaged, or pasteurized by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the Food and Drug Administration in chapter 3, part 401.11 of its Food Code so as to prevent food borne illnesses. “Prepared food” does not include the following if sold without eating utensils provided by the seller:
1. Food sold in an unheated state by weight or volume as a single item.
2. Bakery items including but not limited to bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, cookies or tortillas.
“Prescription" means an order, formula or recipe issued in any form of oral, written, electronic, or other means of transmission by a duly licensed practitioner.
"Prewritten computer software" means "computer software," including prewritten upgrades, which is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more "prewritten computer software" programs or prewritten portions thereof does not cause the combination to be other than "prewritten computer software." "Prewritten computer software" includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than the specific purchaser. Where a person modifies or enhances "computer software" of which the person is not the author or creator, the person shall be deemed to be the author or creator only of such person's modifications or enhancements. "Prewritten computer software" or a prewritten portion thereof that is modified or enhanced to any degree, where such modification or enhancement is designed and developed to the specifications of a specific purchaser, remains "prewritten computer software;" provided, however, that where there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, such modification or enhancement shall not constitute "prewritten computer software.”
"Prosthetic device" means a replacement, corrective, or supportive device including repair and replacement parts for same worn on or in the body to:
(a)Artificially replace a missing portion of the body;
Prevent or correct physical deformity or malfunction; or
Support a weak or deformed portion of the body.
Prosthetic devices include, but are not limited to corrective eyeglasses; contact lenses; hearing aids and dental prosthesis.
"Protective equipment" means items for human wear and designed as protection of the wearer against injury or disease or as protections against damage or injury of other persons or property but not suitable for general use.
"Purchaser'', a person to whom a sale of tangible personal property is made or to whom services are furnished and includes a buyer, vendee, lessee, licensee, or grantee.
"Purchase price" applies to the measure subject to use tax and has the same meaning as "sales price".
"Retailer'' includes (i) every person engaged in the business of making sales at retail; (ii) every person engaged in the making of retail sales at auction of tangible personal property whether owned by such person or others; (iii) every person engaged in the business of making sales for storage, use or other consumption, or in the business of making sales at auction of tangible personal property whether owned by such person or others for storage, use or other consumption; (iv) every salesman, representative, peddler or canvasser who, in the opinion of the commissioner, it is necessary to regard for the efficient administration of this chapter as the agent of the dealer, distributor, supervisor or employer under whom he operates or from whom he obtains the tangible personal property sold by him, in which case the commissioner may treat and regard such agent as the retailer jointly responsible with his principal, employer or supervisor for the collection and payment of the tax imposed by this chapter; and (v) the commonwealth, or any political subdivision thereof, or their respective agencies when such entity is engaged in making sales at retail of a kind ordinarily made by private persons.
"Retail establishment'', any premises in which the business of selling services or tangible personal property is conducted, or, in or from which any retail sales are made.
"Retail sale or Sale at retail" means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent.
"Sale'' and "selling'' include (i) any transfer of title or possession, or both, exchange, barter, lease, rental, conditional or otherwise, of tangible personal property or the performance of services for a consideration, in any manner or by any means whatsoever; (ii) the producing, fabricating, processing, printing or imprinting of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting; (iii) the furnishing and distributing of tangible personal property or services for a consideration by social clubs and fraternal organizations to their members or others; (iv) a transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of the price; (v) a transfer for a consideration of the title or possession of tangible personal property which has been produced, fabricated or printed to the special order of the customer, or of any publication; (vi) the furnishing of information by printed, mimeographed or multigraphed matter, or by duplicating written or printed matter in any other manner, including the services of collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof to other persons, but excluding the furnishing of information which is personal or individual in nature and which is not or may not be substantially incorporated in reports furnished to other persons, and excluding the services of advertising or other agents, or other persons acting in a representative capacity, and information services used by newspapers, radio broadcasters and television broadcasters in the collection and dissemination of news and excluding the furnishing of information by photocopy or other similar means by not for profit libraries which are recognized as exempt from taxation under § 50l(c)(3) of the Federal Internal Revenue Code; (vii) the performance of services for a consideration, excluding (a) services performed by an employee for his employer whether compensated by salary, commission, or otherwise, (b) services performed by a general partner for his partnership and compensated by the receipt of distributive shares of income or loss from the partnership; and (c) the performance of services for which the provider is compensated by means of an honorarium, or fee paid to any person or entity registered under 15 USC 80b-3 or 15 USC 78q-1 for services the performance of which require such registration, for services related thereto or for trust, custody, and related cash management and securities services of a trust company as defined in chapter one hundred and seventy-two.
"Sales price" applies to the measure subject to sales tax and means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money; whether received in money or otherwise, without any deduction for the following:
(a)The seller's cost of the property sold;
(b)The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
(c)Charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
(d) Delivery charges;
(e) Credit for any trade-in, except as provided in sections 26 and 27A of this chapter;
The following charges are excluded only if they are separately stated on the invoice, billing, or similar document given to the purchaser:
(a)Installation charges;
''Sales price'' shall not include:
Discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
Interest, financing, and carrying charges from credit extended on the sale of personal property or services, if the amount is separately stated on the invoice, bill of sale or similar document given to the purchaser;
Any taxes legally imposed directly on the consumer that are separately stated on the invoice, billing, or similar document given to the purchaser; and
(d) Employee discounts that are reimbursed by a third party on sales of motor vehicles and manufacturer rebates on motor vehicles.
“Sales price” shall include consideration received by the seller from third parties if:
A. The seller actually receives consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale;
B. The seller has an obligation to pass the price reduction or discount through to the purchaser;
C. The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser; and
D. One of the following criteria is met:
1. The purchaser presents a coupon, certificate or other documentation to the seller to claim a price reduction or discount where the coupon, certificate or documentation is authorized, distributed or granted by a third party with the understanding that the third party will reimburse any seller to whom the coupon, certificate or documentation is presented;
2. The purchaser identifies himself or herself to the seller as a member of a group or organization entitled to a price reduction or discount (a “preferred customer” card that is available to any patron does not constitute membership in such a group), or
3. The price reduction or discount is identified as a third party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate or other documentation presented by the purchaser.
“Seller” or "Vendor” a retailer or other person making sales, leases or rentals of tangible personal property or services.
"Services'' as used in this chapter and chapter 64I, the term “services” shall be limited to telecommunications services and related services as defined in Section 1A of this chapter and the provision of access to prewritten computer software on a server owned by the seller or a third party.
"Soft drinks" means non-alcoholic beverages that contain natural or artificial sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume.
"Sport or recreational equipment" means items designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use. "Sport or recreational equipment" are mutually exclusive of and may be taxed differently than apparel within the definition of "clothing," "clothing accessories or equipment," and "protective equipment."
“Tangible personal property” means personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software. The term shall not include any products delivered electronically to a purchaser except prewritten computer software.
"Tax'' the excise tax imposed by this chapter.
"Taxpayer'' any person required to make returns or pay the tax imposed by this chapter.
"Tobacco" means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.
SECTION 2: Chapter 64H of the General Laws, as so appearing, is hereby amended by inserting after section 1 the following new sections:--
SECTION 1A. Telecommunications and Related Services
All of the following shall be deemed to be services for purposes of this chapter and chapter sixty-four I:
“Ancillary services” means services that are associated with or incidental to the provision of “telecommunications services”, including but not limited to “detailed telecommunications billing”, “directory assistance”, “vertical service”, and “voice mail services”.
“Conference bridging service” means an “ancillary service” that links two or more participants of an audio or video conference call and may include the provision of a telephone number. “Conference bridging service” does not include the “telecommunications services” used to reach the conference bridge.
“Detailed telecommunications billing service” means an “ancillary service” of separately stating information pertaining to individual calls on a customer’s billing statement.
“Directory assistance” means an “ancillary service” of providing telephone number information, and/or address information.
“International” means a “telecommunications service” that originates or terminates in the United States and terminates or originates outside the United States, respectively. United States includes the District of Columbia or a U.S. territory or possession.
“Interstate” means a “telecommunications service” that originates in one United States state, or a United States territory or possession, and terminates in a different United States state or a United States territory or possession.
“Intrastate” means a “telecommunications service” that originates in one United States state or a United States territory or possession, and terminates in the same United States state or a United States territory or possession.
“Vertical service” means an “ancillary service” that is offered in connection with one or more “telecommunications services”, which offers advanced calling features that allow customers to identify callers and to manage multiple calls and call connections, including “conference bridging services”.
“Voice mail service” means an “ancillary service” that enables the customer to store, send or receive recorded messages. “Voice mail service” does not include any “vertical services” that the customer may be required to have in order to utilize the “voice mail service”.
“Telecommunications service” means the electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points. The term “telecommunications service” includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code or protocol of the content for purposes of transmission, conveyance or routing without regard to whether such service is referred to as voice over Internet protocol services or is classified by the Federal Communications Commission as enhanced or value added. “Telecommunications service” does not include:
A. Data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered by an electronic transmission to a purchaser where such purchaser’s primary purpose for the underlying transaction is the processed data or information;
B. Installation or maintenance of wiring or equipment on a customer’s premises;
C. Tangible personal property;
D. Advertising, including but not limited to directory advertising.
E. Billing and collection services provided to third parties;
F. Internet access service;
G. Radio and television audio and video programming services, regardless of the medium, including the furnishing of transmission, conveyance and routing of such services by the programming service provider. Radio and television audio and video programming services shall include but not be limited to cable service as defined in 47 USC 522(6) and audio and video programming services delivered by commercial mobile radio service providers, as defined in 47 CFR 20.3;
H. “Ancillary services”; or
I. Digital products “delivered electronically”, including but not limited to software, music, 4 video, reading materials or ring tones.
“800 service” means a “telecommunications service” that allows a caller to dial a toll-free number without incurring a charge for the call. The service is typically marketed under the name “800”, “855”, “866”, “877”, and “888” toll-free calling, and any subsequent numbers designated by the Federal Communications Commission.
“900 service” means an inbound toll “telecommunications service” purchased by a subscriber that allows the subscriber’s customers to call in to the subscriber’s prerecorded announcement or live service. “900 service” does not include the charge for: collection services provided by the seller of the “telecommunications services” to the subscriber, or service or product sold by the subscriber to the subscriber’s customer. The service is typically marketed under the name “900” service, and any subsequent numbers designated by the Federal Communications Commission.
“Fixed wireless service” means a “telecommunications service” that provides radio communication between fixed points.
“Mobile wireless service” means a “telecommunications service” that is transmitted, conveyed or routed regardless of the technology used, whereby the origination and/or termination points of the transmission, conveyance or routing are not fixed, including, by way of example only, “telecommunications services” that are provided by a commercial mobile radio service provider.
“Paging service” means a “telecommunications service” that provides transmission of coded radio signals for the purpose of activating specific pagers; such transmissions may include messages and/or sounds.
“Prepaid calling service” means the right to access exclusively “telecommunications services”, which must be paid for in advance and which enables the origination of calls using an access number or authorization code, whether manually or electronically dialed, and that is sold in predetermined units or dollars of which the number declines with use in a known amount.
“Prepaid wireless calling service” means a “telecommunications service” that provides the right to utilize “mobile wireless service” as well as other non-telecommunications services including the download of digital products “delivered electronically”, content and “ancillary services”, which must be paid for in advance that is sold in predetermined units of dollars of which the number declines with use in a known amount.
“Private communications service” means a “telecommunications service” that entitles the customer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels.
“Residential telecommunications service” means a “telecommunications service” provided to an individual for personal use at a residential address, including an individual dwelling unit such as an apartment. In the case of institutions where individuals reside, such as schools or nursing homes, “telecommunications service” is considered residential if it is provided to and paid for by an individual resident rather than the institution.
“Value-added non-voice data service” means a service that otherwise meets the definition of “telecommunications services” in which computer processing applications are used to act on the form, content, code, or protocol of the information or data primarily for a purpose other than transmission, conveyance or routing.
SECTION 1B. General Sourcing Rules.
(a) The provisions of this section apply regardless of the characterization of a product as tangible personal property, a digital good, or a service. The provisions of this section only apply to determine a seller's obligation to pay or collect and remit a sales or use tax with respect to the seller's retail sale of a product under this chapter and chapter sixty-four I. These provisions do not affect the obligation of a purchaser or lessee to remit tax on the use of the product to the taxing jurisdictions of that use. The provisions of this section also apply to watercraft, motor vehicles, trailers, and semi-trailers. The provisions of this section do not apply to (i) direct mail, (ii) telecommunications services, except prepaid calling services and prepaid wireless calling services, and (iii) ancillary services. So called wire sales by florists, that is orders taken by a florist in the commonwealth and filled by another florist in another state, are sourced to the business location of the florist in the commonwealth in accordance with (b)(1) of this section.
(b) The retail sale, excluding lease or rental, of a product shall be sourced as follows:
(1) When the product is received by the purchaser at a business location of the seller, the sale is sourced to that business location.
(2) When the product is not received by the purchaser at a business location of the seller, the sale is sourced to the location where receipt by the purchaser (or the purchaser’s donee, designated as such by the purchaser) occurs, including the location indicated by instructions for delivery to the purchaser or donee, known to the seller.
(3) When paragraphs (1) and (2) of subsection (b) do not apply, the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller’s business when use of this address does not constitute bad faith.
(4) When paragraphs (1), (2) and (3) of subsection (b) do not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including the address of a purchaser’s payment instrument, if no other address is available, when use of this address does not constitute bad faith.
(5) When none of the provisions of paragraphs (1), (2), (3) or (4) of subsection (b) apply, including the circumstance in which the seller is without sufficient information to apply the provisions of paragraphs (1), (2), (3) or (4) of subsection (b), then the location will be determined by the address from which the tangible personal property was shipped, from which the digital good or the computer software delivered electronically was first available for transmission by the seller, or from which the service was provided (disregarding for these purposes any location that merely provided the digital transfer of the product sold).
(c) The lease or rental of tangible personal property, other than the property identified in subsection (d) or (e) shall be sourced as follows:
(1) For a lease or rental that required recurring periodic payments, the first periodic payment is sourced the same as a retail sale in accordance with the provisions of subsection (b). Periodic payments made subsequent to the first payment are sourced to the primary property location for each period covered by the payment. The primary property location shall be as indicated by an address for the property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of this address does not constitute bad faith. The property location shall not be altered by intermittent use at different locations, such as use of business property that accompanies employees on business trips and service calls.
(2) For a lease or rental that does not require recurring periodic payments, the payment is sourced the same as a retail sale in accordance with the provisions of subsection (b).
(3) Subsection (c) does not affect the imposition or computation of sales or use tax on leases or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.
(d) The lease or rental of motor vehicles, trailers or semi-trailers that do not qualify as transportation equipment, as defined in subsection (e), shall be sourced as follows:
(1) For a lease or rental that requires recurring payments, each periodic payment is sourced to the primary property location. The primary property location shall be as indicated by an address for the property provided by the lessee that is available to the lessor from its records maintained in the ordinary course of business, when use of this address does not constitute bad faith. This location shall not be altered by intermittent use at different locations.
(2) For a lease or rental that does not require recurring periodic payments, the payment is sourced the same as a retail sale in accordance with the provisions of subsection (b).
(3) Subsection (d) does not affect the imposition or computation of sales or use tax on leases or rentals based on a lump sum or accelerated basis, or on the acquisition of property for lease.
(e) The retail sale, including lease or rental, of transportation equipment shall be sourced the same as a retail sale in accordance with the provisions of subsection (b), notwithstanding the exclusion of lease or rental in subsection (b). “Transportation equipment” means any of the following:
(1) locomotives and railcars that are utilized for the carriage of persons or property in interstate commerce;
(2) trucks and truck-tractors with a Gross Vehicle Weight Rating (GVWR) of 10,001 pounds or greater, trailers, semi-trailers, or passenger buses that are registered through the International Registration Plan and operated under authority of a carrier authorized and certificated by the United States Department of Transportation or other federal authority to engage in the carriage of persons or property in interstate commerce;
(3) aircraft that are operated by air carriers authorized and certificated by the U.S. Department of Transportation or another federal or foreign authority to engage in the carriage of persons or property in interstate or foreign commerce.
(4) containers designed for use on and component parts attached or secured on the items set forth in this subsection.
(f) For purposes of subsection (b), the terms “receive” and “receipt” mean: taking possession of tangible personal property, or making first use of services, or taking possession or making first use of digital goods, whichever comes first. The terms “receive” and “receipt” do not include possession by a shipping company on behalf of the purchaser.
SECTION 1C. Direct Mail Sourcing Rules.
(a) Notwithstanding section 1B, a purchaser of direct mail that is not a holder of a direct mail pay permit shall provide to the seller in conjunction with the purchase either a Direct Mail Form or information to show the jurisdiction to which the direct mail is delivered to recipients.
Upon receipt of the Direct Mail Form, the seller is relieved of all obligations to collect, pay, or remit the applicable tax and the purchaser is obligated to pay or remit the applicable tax on a direct pay basis. A Direct Mail Form shall remain in effect for all future sales of direct mail by the seller to the purchaser until it is revoked in writing.
Upon receipt of information from the purchaser showing the jurisdictions to which the direct mail is delivered to recipients, the seller shall collect the tax according to the delivery information provided by the purchaser. In the absence of bad faith, the seller is relieved of any further obligation to collect tax on any transaction where the seller has collected tax pursuant to the delivery information provided by the purchaser.
If the purchaser of direct mail does not have a direct pay permit and does not provide the seller with either a Direct Mail Form or delivery information, as required by subsection (a) of this section, the seller shall collect the tax according to section 1B, subsection (a) 5. Nothing in this paragraph shall limit the purchaser’s obligation for sales or use tax to any state to which the direct mail is delivered.
If a purchaser of direct mail provides the seller with documentation of direct pay authority, the purchaser shall not be required to provide a Direct Mail Form or delivery information
SECTION 1D. Telecommunications and Related Services Sourcing Rules.
Except for the defined telecommunication services in subsection (c), the sale of telecommunications services sold on a call by call basis shall be sourced to (i) each level of taxing jurisdiction where the call originates and terminates in that jurisdiction or (ii) each level of taxing jurisdiction where the call either originates or terminates and in which the services address is also located.
Except for the defined telecommunications services in subsection (c), a sale of telecommunications services sold on a basis other than a call by call basis, is sourced to the customer’s place of primary use.
The sale of the following telecommunications services shall be sourced to each level of taxing jurisdiction as follows:
A sale of mobile telecommunications services other than air-to-ground radiotelephone service and prepaid calling service, is sourced to the customer’s place of primary use as required by the Mobile Telecommunications Sourcing Act.
A sale of post-paid calling service is sourced to the origination point of the telecommunications signal as first identified by either (i) the seller’s telecommunications system, or (ii) information received by the seller from its service provider, where the system used to transport such signals is not that of the seller.
3. A sale of prepaid calling service or a sale of a prepaid wireless calling service is sourced in accordance with section 1B of this chapter. Provided however, in the case of a sale of prepaid wireless calling service, the rule provided in section 1B, subsection (b)(5) shall include as an option the location associated with the mobile telephone number.
4. A sale of a private communication service is sourced as follows:
Service for a separate charge related to a customer channel termination point is sourced to each level of jurisdiction in which such customer channel termination point is located.
Service where all customer termination points are located entirely within one jurisdiction or levels of jurisdiction is sourced in such jurisdiction in which the customer channel termination points are located.
Service for segments of a channel between two customer channel termination points located indifferent jurisdictions and which segment of channel are separately charged is sourced fifty percent in each level of jurisdiction in which the customer channel termination points are located.
Service for segments of a channel located in more than one jurisdiction of levels of jurisdiction and which segments are not separately billed is sourced in each jurisdiction based on the percentage determined by dividing the number of customer channel termination points in such jurisdiction by the total number of customer channel termination points.
(d) The sale of an ancillary service is sourced to the customer’s place of primary use.
SECTION 1E. Telecommunications Sourcing Definitions. For the purpose of section 1D, the following definitions apply:
“Air-to-Ground Radiotelephone service” means a radio service, as that term is defined in 47 CFR 22.99, in which common carriers are authorized to offer and provide radio telecommunications service for hire to subscribers in aircraft.
“Ancillary Services” means services that are associated with or incidental to the provision of “telecommunications services,” including but not limited to “detailed telecommunications billing,” “directory assistance,” “vertical service,, and “voice mail services.”
“Call-by-call Basis” means any method of charging for telecommunications services where the price is measured by individual calls.
“Communications Channel” means a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points.
“Customer” means the person or entity that contracts with the seller of telecommunications services. If the end user of telecommunications services is not the contracting party, the end user of the telecommunications service is the customer of the telecommunications service, but this sentence only applies for the purpose of sourcing sales of telecommunication services under section 1C. “Customer” does not include a reseller of telecommunications service or for mobile telecommunications service of a serving carrier under an agreement to serve the customer outside the home service provider’s licensed service area.
“Customer Channel Termination Point” means the location where the customer either inputs or receives communications.
“End User” means the person who utilizes the telecommunication service. In the case of an entity, “end user” means the individual who utilizes the service on behalf of the entity.
“Home service provider” means the same as that term is defined in section 124(5) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).
“Mobile telecommunications service” means the same as that term is defined in section 124(7) of Public Law 106-252 (Mobile Telecommunications Sourcing Act).
“Place of primary use” means the street address representative of where the customer’s use of the telecommunications service primarily occurs, which must be the residential street address or the primary business street address of the customer. In the case of mobile telecommunications services, “place of primary use” must be within the licensed service area of the home service provider.
“Post-paid calling service” means the telecommunications service obtained by making a payment on a call-by-call basis either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, or debit card, or by charge made to a telephone number which is not associated with the origination or termination of the telecommunications service. A post-paid calling service includes a telecommunications service, except a prepaid wireless calling service, that would be a prepaid calling service except it is not exclusively a telecommunication service.
“Prepaid calling service” means the right to access exclusively telecommunications services, which must be paid for in advance and which enables the origination of calls using an access number or authorization code, whether manually or electronically dialed, and that is sold in predetermined units or dollars of which the number declines with use in a known amount.
“Prepaid wireless calling service” means a telecommunications service that provides the right to utilize mobile wireless service as well as other non-telecommunications services, including the download of digital products delivered electronically, content and ancillary services, which much be paid for in advance that is sold in predetermined units or dollars of which the number declines with use in a known amount.
“Private communication service” means a telecommunication service that entitles the customer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel of channels.
“Service address” means:
The location of the telecommunications equipment to which a customer’s call is charged and from which the call originates or terminates, regardless of where the call is billed or paid.
If the location in subsection (O)(1) is not known, service address means the origination point of the signal of the telecommunications services first identified by either the seller’s telecommunications system or in information received by the seller from its service provider, where the system used to transport such signal is not that of the seller.
If the location in section (O)(1) and subsection (O)(2) are not known, the service address means the location of the customer’s place of primary use.
SECTION 3: Section 2 of Chapter 64H of the General laws, as so appearing, is hereby amended by replacing it with the following:
An excise is hereby imposed upon sales at retail sourced to the commonwealth under the applicable rules in this chapter, by any seller, of tangible personal property, bundled transactions including a taxable product, or services at the rate of five percent on all such sales of such property or services, except as otherwise provided in this chapter, and not on a “service charge” or “tip” that is distributed by a seller to service employees, wait staff employees or service bartenders as provided in section 152A of chapter 149. In the case of a bundled transaction that includes telecommunications services, ancillary services, internet access, or audio or video programming service, if the price is attributable to products that are taxable and products that are nontaxable, the portion of the price attributable to the nontaxable products may be subject to tax unless the seller can identify by reasonable and verifiable standards such portion from its books and records that are kept in the regular course of business for other purposes, including, but not limited to, non-tax purposes. For purposes of reporting the sale or recharge of prepaid calling services or prepaid wireless calling services, the sale is deemed to occur on the date of the transfer for consideration. The excise shall be paid by the seller to the commissioner at the time provided for filing the return required by section sixteen of chapter sixty-two C.
SECTION 4: Section 4 of Chapter 64H of the General Laws, as so appearing, is hereby amended by striking it out in its entirely and inserting in its place the following new Section 4:
For the purpose of adding and collecting the tax imposed by this chapter to be reimbursed to the seller by the purchaser, the tax computation must be carried to the third decimal place, and it must be rounded to a whole cent, rounding up to the next cent whenever the third decimal place is greater than four. A seller may elect to compute the tax due on a transaction on an item or an invoice basis.
SECTION 5: Section 6 of Chapter 64H of the General Laws, as so appearing, is hereby amended as follows:
SECTION 6(b) is amended by striking everything following the word “import” and adding a period following that word.
SECTION 6(e) is amended by adding the following sentence at the end of the section:
A purchaser may also claim this exemption by use of a certificate in a form approved by the Streamlined Sales Tax Governing Board.
SECTION 6(g) is amended by deleting the period at the end of the section and adding the following:
,except alcoholic beverages for on-premises consumption.
SECTION 6(h) is repealed in its entirety and replaced with the following:
Sales of food and food ingredients including candy, soft drinks, or food sold through vending machines with a sales price of less than $3.50, but not alcoholic beverages for on-premises consumption, dietary supplements, prepared food or tobacco. Prepared food sold by a bed and breakfast establishment or bed and breakfast home as defined in chapter 64G shall not be subject to tax under this chapter where the value of the breakfast served is included in the rent for the room.
SECTION 6(i) is amended by deleting clause (4) and inserting in its place the following:
(4) residential intrastate telecommunications services.
SECTION 6(k) is repealed in its entirely and replaced with the following:
Sales of essential clothing, not including clothing accessories, protective equipment, sport or recreational equipment, or fur clothing as defined in this chapter.
SECTION 6(l) is repealed in its entirety and replaced with the following:
Sales of the following on prescription: drugs and over-the-counter drugs for human use, durable medical equipment for home use, mobility enhancing equipment, and prosthetic devices.
SECTION 6(cc) is amended by striking the word “meal” each time it appears and substituting “prepared food” and by striking the word “prepared by” in lines 353 and 357 and inserting “made by”.
SECTION 6(ff) is repealed in its entirety and replaced with the following:
(ff) Sales of "direct and cooperative direct mail promotional advertising materials'' defined as individual discount coupons, or advertising leaflets incorporating the coupons within the promotional advertising materials no greater than 6 pages in length, and including any accompanying envelopes and labels. In order to be exempt hereunder, the promotional advertising materials shall be distributed as a part of a package of materials promoting 1 or more than 1 business, each operated at separate and distinct locations, and directed in a single package to potential customers, at no charge to the potential customer, of the businesses paying for the delivery of such material. For the purpose of this paragraph, "direct and cooperative direct mail promotional advertising materials'' shall not include mail order catalogs, department store catalogs, telephone directories, or similar printed advertising books, booklets or circulars greater than 6 pages in total length.
SECTION 6(ll) is amended by striking it and inserting the following in its place:
(ll) Sales of gold or silver bullion or coins traded and sold according to their value as precious metal, but not coins sold for their numismatic value. The word "bullion'' shall not include fabricated precious metal which has been processed or manufactured for industrial, professional or artistic uses.
SECTION 6(qq) is amended by deleting, in the last sentence of that section, the following words:
in good faith
The section is further amended by added the following new section 6(xx):
Sales of tickets for admissions to places of amusement and sports.
SECTION 6: Section 7 of Chapter 64H of the General Laws, as so appearing, is hereby amended by striking the section in its entirety and replacing it with the following:
No person shall do business in this commonwealth as a seller unless a registration shall have been issued to him. For persons with business locations physically located in the commonwealth, a registration shall be obtained for each place of business in the commonwealth in accordance with section sixty-seven of chapter sixty-two C. A seller may select one of the following methods of remittances:
Model 1, wherein a seller selects a Certified Service Provider as an agent to perform all of the seller’s sales or use tax functions, other than the seller’s obligation to remit tax on its own purchases. For purposes of this section, an agent is a person authorized in writing by a seller to represent the seller before member states of the Streamlined Sales Tax Governing Board;
Model 2, wherein a seller selects a Certified Automated System to use which calculates the amount of tax due on a transaction, but retains responsibility for remitting the tax; or
Model 3, wherein a seller or an affiliated group of sellers utilizes its own proprietary automated sales tax system that calculates the amount of tax due each jurisdiction and has been certified as a Certified Automated System. A Model 3 seller must:
have sales in at least five member states of the Streamlined Sales Tax Governing Board, and
have total annual sales revenue of at least five hundred million dollars, and
enter into a performance agreement approved by the Streamlined Sales Tax Governing Board, Inc.
SECTION 7: Chapter 64H of the General Laws, as so appearing, is hereby is amended by adding after Section 7, the following new section 7A:
7A. Amnesty for Registration
A seller that registers to collect and remit the tax imposed by this chapter and chapter 64I on or after the date the commonwealth is accepted as a full member of the Streamlined Sales Tax Governing Board, Inc. and for a period of one year thereafter, will be entitled to amnesty for uncollected or unpaid sales or use tax, penalty and interest providing that the seller was not registered in the commonwealth in the 12 month period preceding the date of such acceptance. The amnesty provided by this section is not available to a seller with respect to any matter or matters for which the seller received notice of the commencement of an audit or an audit assessment, including any administrative or judicial appeals. The amnesty is also not available for sales or use taxes already paid or remitted to the commonwealth or to taxes collected by the seller. The amnesty is effective, absent the seller’s fraud or intentional misrepresentation of a material fact, as long as the seller continues registration and continues to pay or collect and remit applicable sales or use taxes for a period of at least 36 months. The amnesty is applicable only to sales or use taxes due from a seller in its capacity as a seller and not to sales or sue taxes due from a seller in its capacity as a buyer.
SECTION 8: Chapter 64H of the General Laws, as so appearing, is hereby is amended by adding after Section 7A, the following new section 7B:
7B. Monetary Allowances for Sales Tax Collection
A monetary allowance shall be allowed to a Certified Service Provider under Model 1 in accordance with the terms of the contracts between the Streamlined Sales Tax Governing Board and the Certified Service Providers for a period not to exceed 24 months following a voluntary seller’s registration through the Streamlined Sales Tax Governing Board’s central registration process. The compensation shall be a percentage of tax revenue generated for the commonwealth by the voluntary seller that does not have a requirement to register to collect the tax.
A seller electing to use a Certified Automated System under Model 2 may receive a monetary allowance to be determined by the Streamlined Sales Tax Project Governing Board for a period not to exceed twenty four months following a voluntary seller’s registration through the Streamlined Sales Tax Governing Board’s central registration process. The compensation may be a percentage of tax revenue generated for the commonwealth by the voluntary seller that does not have a requirement to register to collect the tax.
A seller that utilizes its own proprietary automated sales tax system that has been certified as a Certified Automated System under Model 3 and all other sellers not covered under (a) or (b) that voluntarily register through the Streamlined Sales Tax Governing Board’s central registration process may receive a monetary allowance to be determined by the Streamlined Sales Tax Governing Board for a period not to exceed 24 months following the registration. The compensation may be a percentage of tax revenue generated for the commonwealth by the voluntary seller that does not have a requirement to register to collect the tax.
A seller may receive additional compensation as required by the Streamlined Sales and Use Tax Agreement, as amended.
SECTION 9: Section 8 of Chapter 64H of the General Laws, as so appearing, is hereby amended by striking the section in its entirety and replacing it with the following:
It shall be presumed that all gross receipts of a seller from the sale of services or tangible personal property are from sales subject to tax until the contrary is established. The burden of proving that a sale of services or tangible personal property by any seller is not subject to tax shall be upon such seller unless he takes from the purchaser a certificate of exemption to the effect that the service or property is purchased for resale, or the service or property is exempt from the tax imposed by this chapter and such certificate of exemption is obtained by the seller not later than ninety days subsequent to the date of the sale. Where a certificate is not obtained within the foregoing time limit the seller is not relieved of its burden of proving that the sale was exempt or for resale and the seller must prove by other means, within one hundred twenty days subsequent to the date of notice from the commissioner, that the sale was not a retail sale subject to tax or produce a fully completed exemption certificate from the purchaser taken in good faith.
The certificate of exemption shall relieve the seller from the burden of proof and any liability for the tax if it is determined that the purchaser improperly claimed an exemption unless:
the seller fraudulently fails to collect the tax, or
the seller solicits purchasers to participate in the unlawful claim of an exemption, or
a seller physically located within the commonwealth accepts an exemption certificate that claims an entity based exemption not contained in this chapter in a transaction involving a product received by the purchaser at a business location of the seller.
The certificate of exemption shall bear the name and address of the purchaser and the purchaser’s tax identification number or other identification number. If the certificate of exemption is submitted in paper form by the purchaser, it shall bear the purchaser’s signature. The certificate shall be in such form as the commissioner may prescribe or that has been approved by the Streamlined Sales Tax Governing Board.
If a purchaser who gives a certificate of exemption indicating that the purchase was for resale in the regular course of business makes any use of the service or property other than retention, demonstration or display while holding it for sale in the regular course of business, the use shall be deemed a retail sale by the purchaser as of the time the service or property is first used by him, and the cost of the service or property to him shall be deemed the gross receipts from such retail sale. If the sole use of the property other than retention, demonstration or display in the regular course of business is the rental of the property while holding it for sale, the purchaser may elect to include in its gross receipts the amount of the rental charge rather than the cost of the property to him.
If a purchaser who gives a certificate of exemption makes any use of the property inconsistent with the exemption claimed on the certificate, the use shall be deemed a retail sale by the purchaser as of the time the property is first so used and the cost of the property to the purchaser shall be deemed the gross receipts from such retail sale.
A seller may obtain a blanket exemption certificate from a purchaser with which the seller has a recurring business relationship and will be relieved of liability as otherwise provided in this section. For purposes of this section a recurring business relationship exists when a period of no more than twelve months elapses between sales transactions.
For purposes of this section, a certificate of exemption may be either in paper or electronic format. The requirement of taking a certificate is satisfied if the seller otherwise captures all required data elements of such a certificate in its books and records. The commissioner may promulgate rules and regulations determining which services shall be deemed purchased for resale under this section.
SECTION 10: Chapter 64H of the General Laws, as so appearing, is hereby is amended by adding after Section 8, the following new section 8A:
8A. Relief from Liability
A. The commissioner shall publish a taxability matrix in the form and manner prescribed by the Streamlined Sales Tax Governing Board, Inc. and shall relieve sellers and certified service providers from liability for having charged and collected the incorrect amount of sales or use tax resulting from the seller or certified service provider relying on erroneous data provided in the taxability matrix.
B. A purchaser is relieved from liability for having failed to pay the correct amount of sales or use tax in the following circumstances:
1. A purchaser’s seller or CSP relied on erroneous data provided by the commissioner in the taxability matrix;
2. A purchaser holding a direct pay permit relied on erroneous data provided by the commissioner in the taxability matrix;
3. A purchaser relied on erroneous data provided by the commissioner in the taxability matrix.
For purposes of this section, erroneous data is limited to incorrect classification in the taxability matrix of defined products as taxable or exempt, included or excluded from sales price, or included or excluded from a defined product. For purposes of this section, relief from liability includes liability for tax, interest and penalty.
C. Following certification to the Streamlined Sales Tax Governing Board that the commissioner has reviewed the taxability of the product categories contained in software used by a Certified Service Provider or a Certified Automated System, the Certified Service Provider or seller using the Certified Automated System is relieved from liability for not collecting sales or use taxes resulting from reliance on that certification. The relief from liability provided in this section shall not be available where the Certified Service Provider or seller using a Certified Automated System has incorrectly classified an item or transaction into a product category certified by the commissioner. In the case of such a misclassification, the Certified Service Provider or seller using a Certified Automated System shall be given 10 days to correct any such error, and following that 10 day period, will be liable for the failure to collect the correct amount of sales or use taxes.
SECTION 11: Section 26 of Chapter 64H of the General Laws, as so appearing, is amended by adding the following at the end.
Where a motor vehicle is returned to a seller pursuant to a recission of contract within one hundred and eighty days of the date of sale and the entire amounts charged for the motor vehicle, less the sellers' established handling fees, if any, for return of the property, are refunded either in cash or credit, the purchaser may apply to the Commissioner for a refund of any tax paid under this chapter or chapter 64I within the time limitations provided in chapter 62C, section 37. In the case of a recission of contract for the sale of a motor vehicle, the seller’s established handling fees may include a reasonable allowance for the purchaser’s use of the vehicle.
SECTION 12: Section 33 of Chapter 64H of the General Laws, as so appearing, is hereby is amended by striking the section in its entirety and replacing it with the following:
Section 33: Bad Debts. Any seller who has paid to the commissioner an excise under this chapter upon a sale for which credit is given to the purchaser and such account is later determined to be a bad debt may deduct the amount of the bad debt on the return for the period during which the bad debt is written off as uncollectable in the seller’s books and records and is eligible to be deducted for federal income tax purposes, whether or not the seller is required to file a federal income tax return. For purposes of this section, (1) a seller entitled to a deduction does not include an assignee or factor of such seller and (2) bad debt shall have the same meaning as in 26 U.S.C. 166, but excluding financing charges or interest, sales or use taxes charged on the purchase price, uncollectable amounts on property that remain in the possession of the seller until the full purchase price is paid, expenses incurred in attempting to collect any debt, and repossessed property. If a seller takes a deduction for a bad debt as provided in this section and the debt is subsequently collected in whole or in part, the tax on the amount so collected must be paid and reported on the return filed for the period in which the collection is made. For purposes of reporting a payment received on a previously claimed bad debt, any payments made on a debt or account shall be applied first proportionately to the taxable sales price and tax and second to interest, service charges, and any other charges. If a bad debt exceeds the amount of taxable sales for the period during which the bad debt is written off, an application for abatement may be filed within the time limitations of G.L. c. 62C, § 37, provided however that notwithstanding any provisions of G.L. c. 62C, § 37 to the contrary, the three year time limitation shall be measured from the due date of the return on which the bad debt could first be claimed. Where a seller has elected to utilize a Certified Service Provider, the Certified Service Provider may claim, on behalf of the seller any bad debt allowance provided by this section, provided that the Certified Service Provider credits or refunds the full amount of any bad debt allowance or refund to the seller. In situations where the books and records of the seller support an allocation of the bad debts among member states of the Streamlined Sales Tax Governing Board, such an allocation is permitted.
SECTION 13: Chapter 64H of the General Laws, as so appearing, is hereby is amended by adding the following new section 34:
Section 34: Demand for Return of Overpaid Tax
In the event a seller shall refuse to return a sales tax upon request by the customer, the customer shall not have a cause of action against the seller until a written notice of demand is made upon the seller and at least 60 days have elapsed since the time of the demand. Such demand must contain sufficient information to allow the seller to determine the validity of the request.
In connection with a customer’s request for a return of overpaid sales taxes, a seller shall be presumed to have a reasonable business practice if in the collection of sales taxes the seller (i) uses either a provider or system, including a proprietary system, certified by the commonwealth or the Streamlined Sales Tax Governing Board; and (ii) has remitted to the commonwealth all taxes collected, less any deductions, credits, or collection allowances permitted under this chapter.
SECTION 14: Chapter 64H of the General Laws, as so appearing, is hereby is amended by adding the following new section 35:
Section 35: In the event of a rate change in section two of this chapter, the effective date of rate changes for services covering a period starting before and ending after the statutory effective date shall be as follows:
A. For a rate increase, the new rate shall apply to the first billing period starting on or after the effective date.
B. For a rate decrease, the new rate shall apply to bills rendered on or after the effective date.
SECTION 15: Section 1 of Chapter 64I of the General Laws, as so appearing, is hereby amended by adding in the second paragraph after the word “person” and before the word “retailer”, the following:
“purchaser’,
Section 1 of Chapter 64I of the General Laws, as so appearing, is further amended by striking the definition of “purchaser” in its entirety.
SECTION 16: Section 4 of Chapter 64I of the General Laws, as so appearing, is hereby amended by adding the following at the end of the first paragraph:
A vendor’s or seller’s obligation to pay or collect and remit a sales or use tax with respect to the seller’s retail sale of a product are subject to the sourcing of a sale provisions of chapter sixty-four H, which provisions do not affect the obligation of a purchaser or lessee to remit tax on the use of the product to the taxing jurisdiction of that use.
SECTION 17: Section 5 of Chapter 64I of the General Laws, as so appearing, is hereby amended by striking it out in its entirely and inserting in its place the following new Section 5:
For the purpose of adding and collecting the tax imposed by this chapter to be paid to the commonwealth or to be reimbursed to the seller by the purchaser, the tax computation must be carried to the third decimal place, and it must be rounded to a whole cent, rounding up to the next cent whenever the third decimal place is greater than four. A seller may elect to compute the tax due on a transaction on an item or an invoice basis.
SECTION 18: Section 8 of Chapter 64I of the General Laws, as so appearing, is hereby amended by striking the section in its entirely and replacing it with the following:
For the purpose of the proper administration of this chapter and to prevent evasion of the tax imposed hereunder, it shall be presumed that tangible personal property or services sold by any person for delivery in the commonwealth is sold for storage, use or other consumption in the commonwealth until the contrary is established. The burden of proving the contrary is upon the person who makes the sale unless he takes from the purchaser a certificate of exemption to the effect that the service or property is purchased for resale, or the service or property is exempt from the tax imposed by this chapter and such certificate of exemption is received not later than ninety days subsequent to the date of the sale. Where a certificate is not obtained within the foregoing time limit the seller is not relieved of its burden of proving that the sale was exempt or for resale and the seller must prove by other means, within one hundred twenty days subsequent to the date of notice from the commissioner, that the sale was not a retail sale subject to tax or produce a fully completed exemption certificate from the purchaser taken in good faith.
The certificate shall relieve the seller from the burden of proof and any liability for the tax if it is determined that the purchaser improperly claimed an exemption unless
(1) the seller fraudulently fails to collect the tax, or
the seller solicits purchasers to participate in the unlawful claim of an exemption, or
a seller physically located within the commonwealth accepts an exemption certificate that claims an entity based exemption not contained in this chapter in a transaction involving a product received by the purchaser at a business location of the seller.
The certificate of exemption shall bear the name and address of the purchaser and the purchaser’s tax identification number or other identification number. If the certificate of exemption is submitted in paper form by the purchaser, it shall bear the purchaser’s signature. The certificate shall be in such form as the commissioner may prescribe or that has been approved by the Streamlined Sales Tax Governing Board.
If a purchaser who gives a certificate of exemption indicating that the purchase was for resale in the regular course of business makes any use of the service or property other than retention, demonstration or display while holding it for sale in the regular course of business, the storage or use is taxable as of as of the time the service or property is first so stored or used by him. If the sole use of the property other than retention, demonstration or display in the regular course of business is the rental of the property while holding it for sale, the purchaser may elect to include in its gross receipts the amount of the rental charge rather than the cost of the property to him.
If a purchaser who gives a certificate of exemption makes any use of the property inconsistent with the exemption claimed on the certificate, the use shall be deemed a retail sale by the purchaser as of the time the property is first so used and the cost of the property to the purchaser shall be deemed the gross receipts from such retail sale.
It shall be presumed that tangible personal property shipped or brought to the commonwealth by the purchaser was purchased from a retailer for storage, use, or other consumption in the commonwealth provided that such property was shipped or brought into the commonwealth within six months after its purchase.
It shall be presumed that services used within the commonwealth by the purchaser were purchased from the seller for use within the commonwealth provided such services were used within the commonwealth within six months after its purchase.
For purposes of this section, a certificate of exemption may be either in paper or electronic format. The requirement of taking a certificate is satisfied if the seller otherwise captures all required data elements of such a certificate in its books and records. The commissioner may promulgate rules and regulations determining which services shall be deemed purchased for resale under this section.
SECTION 19: Section 34 of Chapter 64I of the General Laws, as so appearing, is hereby amended by striking it out in its entirely and inserting in its place the following new Section 34:
Any seller who has paid to the commissioner an excise under this chapter upon a sale for which credit is given to the purchaser and such account is later determined to be a bad debt may deduct the amount of the bad debt as provided in G.L. c. 64H, section 33.
SECTION 20 : Chapter 64I of the General Laws, as so appears, is amended by adding a new Section 35:
Section 35: Demand for Return of Overpaid Tax
In the event a seller shall refuse to return a use tax collected by the seller upon request by the customer, the provisions of section thirty-four of chapter sixty-four H shall apply.
SECTION 21 : Chapter 64I of the General Laws, as so appears, is amended by adding a new Section 36:
Section 36: In the event of a rate change in section two of this chapter, the provisions of section thirty-five of chapter sixty-four H shall apply.
SECTION 22: The commonwealth hereby adopts the Streamlined Sales and Use Tax Agreement as created on November 12, 2002 and as amended by the member states of the Streamlined Sales Tax Governing Board, Inc. The commissioner may promulgate rules and regulations consistent with the Streamlined Sales and Use Tax Agreement and any subsequent amendments or interpretations thereof adopted by the Streamlined Sales Tax Governing Board, Inc. to ensure that the commonwealth remains in compliance with that agreement, as amended.
SECTION 23: The commissioner is authorized to petition the Streamlined Sales Tax Governing Board to allow the commonwealth to become an associate or full member of the Streamlined Sales Tax Governing Board and to pay the application fee and annual fees from sales and use taxes collected under chapters 64H and 64I. If accepted as an associate or full member, the commonwealth shall be represented at the Streamlined Sales Tax Governing Board meetings by a coalition of 3 delegates:
1 voting member from the Department of Revenue who is appointed by the commissioner, and
1 voting member from each chamber of the legislature appointed by the Speaker of the House and the President of the Senate, respectively.
These 3 delegates shall together decide how the commonwealth’s interests are best represented to the board, voting on issues as indicated above. Since each member state on the Governing Board is allowed only one vote, the commonwealth’s single vote on an issue shall be determined by the majority opinion indicated by the votes of the delegates of the commonwealth’s coalition. If the House delegate is absent, not voting, voting “present,” or abstaining from the vote, that delegate’s proxy shall automatically be given to the Senate delegate. If the Senate delegate is absent, not voting, voting “present,” or abstaining from the vote, that delegate’s proxy shall automatically be given to the House delegate. If the Department of Revenue delegate is absent, not voting, voting “present,” or abstaining from the vote, that delegate’s proxy shall be given to the legislative delegate of his/her choice.
SECTION 24: Sections 1-22 of this bill shall be effective on the first day of the twelfth month following passage.
SECTION 25: Section 23 of this bill shall be effective immediately upon passage.
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