1. Letter Ruling 80-31: Lease and Conditional Sale,
Distinguished
May 22, 1980
You ask about the Massachusetts sales tax treatment of a transaction denominated a "lease" of equipment by the terms of the
governing agreement, with ********** Corporation or its subsidiary denominated "Lessor." The leasing agreement provides
that:
(1) at all times during the term of the agreement, the equipment leased shall be the sole and exclusive property of the "Lessor",
with the "Lessee" having only the right to use it;
(2) payment of "Total Rent" is to be made in monthly installments;
(3) for purposes of certain depreciation and investment credit provisions of the Internal Revenue Code and for related purposes,
the "Lessor" is not the "tax owner" of the equipment;
(4) upon default the "Lessor" may declare all unpaid amounts of "Total Rent" immediately due and payable, and/or repossess
the equipment; and
(5) title to the equipment shall vest in the "Lessee" upon expiration of the term of the agreement, so long as the "Lessee" has
satisfied all of its obligations under the agreement.
The agreement does not separately state any amount representing interest or other financing charges.
You inquire (1) whether the transaction is taxable all at once at the time of sale or as each monthly installment comes due; and (2)
whether the portion of charges attributable to interest received by ********** Corporation as "Lessor" is subject to tax.
Massachusetts General Laws Chapter 64H, Section 1(12)(a) defines "sale" and "selling" as any transfer of title or possession, or
both, of tangible personal property for a consideration, conditional or otherwise, including lease and rental. Chapter 64H, Section
1(14) defines "sales price" as the total amount paid by a purchaser to a vendor as consideration for a retail sale, valued in money
or otherwise, and declares that any amount for which credit is given to the purchaser by the vendor must be included in
determining the "sales price.”
Based on the foregoing, it is ruled that the transaction is a conditional sale rather than a true rental for Massachusetts sales tax
purposes. Therefore, a tax based on the total sales price (that is, the "Total Rent" under the agreement) is due at the time of sale.
No deduction from the sales price may be made for amounts not separately stated that may represent interest or other financing
charges.
Very truly yours,
/s/L Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue
LJH/JXD/jmcd

2. LR 80-31

3. Letter Ruling 83-18: Conditional Sales
March 23, 1983
You inquire about the Massachusetts sales and use tax treatment of conditional sales of tangible personal property.
General Laws Chapter 64H, Section 1(12) defines “sale” for sales and use tax purposes as including:
“(a) Any transfer of title or possession, or both, …conditional or otherwise, of tangible personal property for a consideration, in
any manner or by any means whatsoever.
[and]
(d) A transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of
the price."
Chapter 64H, Section 1(14) defines “sales price” as the total amount paid by a purchaser to a vendor as consideration for a retail
sale, valued in money or otherwise, and declares that any amount for which credit is given to the purchaser by the vendor must be
included in determining the sales price.
Therefore, a vendor of tangible personal property must include the total sales price for every conditional sale made during a given
period in his taxable gross receipts for that period, regardless of the amount of payment actually received. The sales price
includes the amount for which credit is extended by the vendor to the purchaser, but does not include separately-stated interest
charges set in good faith.
You also inquire whether, in a conditional sale, the tax exemption of a purchaser passes through to the seller.
Exemptions from the sales and use taxes apply to conditional sales as they apply to any other sales. For example, a vendor who
makes a conditional sale of tangible personal property to a charitable organization may give a resale certificate in lieu of paying a
tax on his purchase of the property; the vendor’s sale of the property to the organization will be exempt if the sale meets the
requirements set forth in Chapter 64H, Section 6(e).
Very truly yours,
/s/Ira A. Jackson
Ira A. Jackson
Commissioner of Revenue
IAJ:JXD:mf
LR 83-18