Massachusetts Rules Medical Equipment Leased When Control Is Transferred

Thursday, April 4th, 2013


The Massachusetts Commissioner of Revenue recently ruled that mobile medical laser eye equipment was "leased" or "rented" for sales tax purposes because control over, and direction of, the equipment was transferred to the resident medical provider. Mass. Ltr. Rul. No. 13-3 (Dept. of Revenue Mar. 13, 2013).

A corporation (Corporation) that provides equipment to medical providers took a mobile medical laser around to various medical providers. The Corporation retained ownership of the equipment, responsibility for maintenance and repair, and the Corporation's own technicians were responsible for set up, calibration between patients, and take-down and removal of the equipment.

However, in Massachusetts "[p]ossession is deemed to have passed to the lessee and constitutes a taxable lease whenever the property is under the lessee's control and direction." Therefore, the Commissioner ruled that a lease or rental had occurred because the medical provider exercised control over the equipment and was responsible for using the equipment on each patient.

The Commissioner also ruled that the set-up, calibration, take-down and removal were all part of the delivery and installation and therefore not taxable so long as those charges (1) reflected the cost of preparing and moving the equipment, (2) were separately stated on the bill, and (3) were set in good faith and reflected the actual costs incurred for delivery and installation.

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