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M & T Charters, Inc. v. Commissioner of Revenue, 404 Mass. 137, 533 N.E.2d 1359

Facts

M & T Charters, Inc. was incorporated in New Hampshire for the purpose of buying, selling, leasing, and managing yachts. The taxpayer purchased a used yacht from a Missouri corporation through a Florida dealer and arranged for repairs in Massachusetts shortly after the purchase. The yacht was used for chartering in both the Caribbean and Massachusetts waters, and the taxpayer was assessed a use tax for the yacht after filing a business use tax return and an application for abatement, which was denied by the Appellate Tax Board.

M & T Charters, Inc. was incorporated in New Hampshire for the purpose of buying, selling, leasing, and managing yachts. The taxpayer purchased a used yacht from a Missouri corporation through a Florida dealer and arranged for repairs in Massachusetts shortly after the purchase.

Issue

Did the taxpayer rebut the statutory presumption that the yacht was purchased for storage, use, or consumption within the Commonwealth, and was the use tax assessment constitutional?

Did the taxpayer rebut the statutory presumption that the yacht was purchased for storage, use, or consumption within the Commonwealth, and was the use tax assessment constitutional?

Rule

The use tax is imposed on the storage, use, or consumption of tangible personal property purchased for such purposes within the Commonwealth, and there is a statutory presumption that property brought into the Commonwealth within six months of purchase is presumed to have been bought for such purposes.

The use tax is imposed on the storage, use, or consumption of tangible personal property purchased for such purposes within the Commonwealth, and there is a statutory presumption that property brought into the Commonwealth within six months of purchase is presumed to have been bought for such purposes.

Analysis

The court found that the taxpayer did not provide sufficient evidence to rebut the presumption that the yacht was purchased for use within Massachusetts, as it was brought into the Commonwealth shortly after purchase and used for chartering in Massachusetts waters. The taxpayer's claims of exemption were also not substantiated, and the court determined that the use tax did not violate the commerce clause due to the substantial nexus established by the yacht's presence and use in Massachusetts.

The court found that the taxpayer did not provide sufficient evidence to rebut the presumption that the yacht was purchased for use within Massachusetts, as it was brought into the Commonwealth shortly after purchase and used for chartering in Massachusetts waters.

Conclusion

The court affirmed the denial of the abatement of the use tax but remanded for recomputation of interest and for findings on whether the taxpayer had reasonable cause for failing to file a proper return.

The court affirmed the denial of the abatement of the use tax but remanded for recomputation of interest and for findings on whether the taxpayer had reasonable cause for failing to file a proper return.

Who won?

The Commissioner of Revenue prevailed because the court upheld the assessment of the use tax, finding that the taxpayer failed to rebut the presumption of use within the Commonwealth.

The Commissioner of Revenue prevailed because the court upheld the assessment of the use tax, finding that the taxpayer failed to rebut the presumption of use within the Commonwealth.

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