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If sales or use tax has been erroneously paid since January 1, 2000, taxpayers will no longer be eligible for vendor credits when the overpayment is discovered on audit and the statute of limitations for seeking abatement has passed. The taxpayer should seek a refund from the vendor to whom tax was paid, if tax has been erroneously paid on an exempt item. (Directive 02-17, Massachusetts Department of Revenue, December 23, 2002)


When a company leases a group of motor vehicles, a clause called TRAC (Terminal Rental Adjustment Clause) can be added to the contract. This clause allows for an adjustment to be made when the lease expires. At the end of the lease the true market value of each vehicle is calculated and compared to the projected value set in the lease. If it is determined a refund needs to be made by the lessor to the lessee, the refund should be made and the lessor's gross receipts should be reduced to reflect this adjustment. However, if it is determined another payment needs to be made by the lessee to the lessor it is considered part of the lease. As a result, this final payment is taxable and the lessor's gross receipts should be adjusted upward. (Department of Revenue Directive 02-08, Motor vehicles -- TRAC Leases, August 1, 2002_


Once considered vendors, all installers of concrete and asphalt in the state of Massachusetts will now be considered contractors for the purpose of collecting sales and use tax starting October 1, 2002. The change came as the Massachusetts Department of Revenue determined the installers were the end consumer thus owing tax for the asphalt and concrete they purchased to complete their contracts. (TIR 02-12, Massachusetts Department of Revenue, August 1, 2002)


A discount chain was subject to Massachusetts sales and use tax when merchandise was sold in Massachusetts but arranged to be picked up by a customer in New Hampshire, which has no sales tax. The retail appliance and electronics store was trying to provide an “alternative location sale” to its customers by attempting to dodge the 5% Massachusetts tax. (Circuit City Stores, Inc. v. Commissioner of Revenue, Docket No. F251413, February 11, 2002)


If machinery and equipment is used directly and exclusively in the manufacturing process of medical and pharmaceutical devices such that they are used to maintain a clean air environment for the manufacturing process, then they are exempt from sales tax. (Letter Ruling 01-6, Massachusetts Department of Revenue, August 17, 2001)



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