Massachusetts Department of Revenue Releases Guidance on a De Minimis Exception for Use Tax on Rolling Stock

The Massachusetts Department of Revenue (DOR) recently released Directive 23-1, which outlines the conditions for a de minimis exception where the Commissioner will not require a taxpayer to pay the use tax for rolling stock used or stored within the state. This directive comes at a time when the DOR is auditing many companies that use trucks and trailers and is currently assessing use tax on rolling stock if no sales tax was collected at the time of sale.

Directive 23-1 provides that “the Commissioner will consider the in-state use [of rolling stock] to be de minimis and will neither impose, nor require the taxpayer to pay, use tax on the use or storage of the rolling stock” where the taxpayer can prove “that the rolling stock that it owns or leases for 12 months or longer was used or stored in Massachusetts for no more than six days during a 12-month period” (emphasis added).

Companies “can demonstrate the frequency with which rolling stock was used or stored in Massachusetts through sufficient records that show the dates of travel into and in Massachusetts, such as GPS logs.” Additionally, a credit against the Massachusetts use tax is allowed if the taxpayer has paid a sales tax legally due to another state and that state allows a corresponding credit for sales or use tax paid to Massachusetts.