One Boston Place, LLC v. Commissioner of Revenue (January 17, 2007)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ONE BOSTON PLACE LLC   	   v.	COMMISSIONER OF REVENUE

Docket No. C277094				Promulgated:
							January 17, 2007


This is an appeal under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the appellee to grant an abatement of sales tax sought by the appellant for the tax periods ending March 31, 2001 and February 28, 2003  (the "tax periods at issue").    
Former Chairman Foley heard the Motion to Dismiss and was joined in the decision for the appellee by Commissioners Scharaffa, Egan, Rose, and Gorton.  
These findings of fact and report are made at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

James A. Weichert for the appellant.

Laura S. Kershner, Esq. for the appellee.
FINDINGS OF FACT AND REPORT
On the basis of the pleadings and documents submitted in connection with a Motion to Dismiss filed by the Commissioner of Revenue ("Commissioner"), the Appellate Tax Board ("Board") made the following findings of fact.  
At all times relevant, the appellant, One Boston Place LLC ("One Boston"), was a single-member limited liability company owned by One Boston Place Real Estate Investment Trust.  One Boston was a customer of Boston Edison Company ("Edison"), which was a vendor of electricity.  After Edison filed its sales tax return, the Commissioner assessed Edison for an underpayment of sales taxes in connection with its sales of electricity to One Boston.  Although it was never introduced in this appeal, Edison apparently filed an abatement application, which the Commissioner denied by a notice dated October 5, 2004.  The abatement denial notice indicates that sales tax should have been collected from One Boston because "One Boston Place LLC and their affiliates have been determined to have more than five officers and employees and do not qualify for the small business energy exemption."  
Sometime thereafter, Edison sent to the Department of Revenue ("DOR") a copy of One Boston's exemption certificate.  On October 26, 2004, Edison notified One Boston that the Commissioner had not honored its sales tax exemption certificate and therefore, Edison was billing One Boston for sales tax on Edison's sales of electricity to One Boston during the tax periods at issue.  
From the record, it appears that One Boston never filed an abatement application or tax returns for the periods at issue with the Commissioner.  On January 7, 2005, One Boston filed its appeal with the Board.  
The Board found that Boston Edison Company, a vendor making sales subject to the sales tax, was the party upon whom the incidence of the tax fell.  Therefore, for the reasons stated in the following Opinion, the Board found that the appellant, a purchaser of electricity, was not a "person aggrieved" by the assessment or the refusal of the Commissioner to abate the tax at issue.  Accordingly, the Board dismissed this appeal for lack of jurisdiction and issued a decision for the appellee. 
      
OPINION
G.L. c. 62C, §§ 37, 38 and 39 govern the abatement process: § 37 requires that a "person aggrieved by the assessment of a tax" file a timely application for abatement with the commissioner; § 38 provides that no tax may be abated unless the "person assessed" files the appropriate tax return "at or before the time of bringing his application for abatement"; and, § 39 requires that a "person aggrieved" by the refusal of the commissioner to abate a tax file an appeal with the Board within sixty days of the commissioner's denial, or within six months of the deemed denial, of the application for abatement.
A person cannot be "aggrieved" by an assessment of tax unless the person was also the one assessed.  See e.g., J & B Leasing Co. v. Commissioner of Revenue, ATB Findings of Fact and Reports 1985-228, 232 (ruling that "'the person aggrieved' is the person assessed").  "Thus, pursuant to [§§ 37 and 38], it is the person assessed who is entitled to file an abatement application."  Household Retail Services, Inc. et al. v. Commissioner of Revenue, ATB Findings of Fact and Reports 2005-23, 36.  
The sales tax is imposed upon sales of tangible personal property made "by any vendor" and "shall be paid by the vendor."  G. L. c. 64H, § 2.  Accordingly, the "person aggrieved" by the imposition of the sales tax, and thus entitled to seek an abatement, is the vendor, not the buyer.  See Supreme Council of the Royal Arcanum v. State Tax Commission, 358 Mass. 111, 112-13 (1970) (ruling that, even though the vendor has the right to add the sales tax to the purchase price, the purchaser has no basis for abatement because "the incidence of the sales tax was upon the vendor, and not upon the purchaser").  
In determining that a purchaser had no basis for abatement of a sales tax, the Supreme Judicial Court has ruled that the "person aggrieved" by the imposition of a tax is not the party that bears its economic burden, but rather the one charged with its legal incidence.  Id.  The Board has also consistently denied abatement of a sales tax to a purchaser on the ground that the vendor, and not the purchaser, was the "person aggrieved" by the tax.  See, e.g., Household Retail Services, ATB Findings of Fact and Reports 2005 at 37 (entity which provides financing for consumer purchases, including payment of tax to vendor, was not the "person aggrieved"); Harvard Business School Association v. Department of Revenue, ATB Findings of Fact and Reports 1986-233, 238 (ruling that exempt-entity purchaser could not claim sales tax exemption, because the legal incidence of tax fell upon the vendor).  Compare Mobil Oil Corporation v. Commissioner of Revenue, ATB Findings of Fact and Reports 2000-121 (purchaser, a petroleum processor, allowed to prosecute sales tax exemption claim before the Board pursuant to a power of attorney granted by vendor).
In the instant appeal, the sales tax at issue was not assessed to One Boston, and One Boston did not file an application for abatement or sales tax returns for the periods at issue.  The legal incidence of the sales tax on electricity fell upon the vendor, Edison, the party which filed the sales tax return with the Commissioner.  Therefore, the Board found and ruled that One Boston was not a "person aggrieved" by the assessment of a tax, it did not file a sales tax return, and it was not a "person aggrieved" by the refusal of the Commissioner to abate the tax.  Accordingly, pursuant to §§ 37, 38, and 39, no abatement can be granted to One Boston.
"Since the remedy by abatement is created by statute, the [board] has no jurisdiction to entertain proceedings for relief by abatement begun at a later time or prosecuted in a different manner than is prescribed by the statute."  Commissioner of Revenue v. A.W. Chesterton Co., 406 Mass. 466, 467-68 (1990) (quoting Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 492 (1936)).
Accordingly, the Board dismissed the instant appeal for lack of jurisdiction and issued a decision for the appellee.

					THE APPELLATE TAX BOARD



By:____________________________________
    Thomas W. Hammond, Jr., Chairman




A true copy,


Attest:_____________________________
  	     Assistant Clerk of the Board 

 

 The appellant's Petition lists the tax periods as "03/31/01 - 02/28/03."  It is unclear whether this designation refers to two distinct tax periods, one ending March 31, 2001 and the other ending February 28, 2003, or whether it includes March 31, 2001 through February 28, 2003.  The Commissioner of Revenue, in its Answer to the Petition, states that there are two distinct tax periods at issue, one ending on March 31, 2001 and one ending February 28, 2003.  Further, the Notice of Abatement Determination lists the two distinct periods.  Accordingly, the Appellate Tax Board ("Board") treats the periods at issue as the two periods ending March 31, 2001 and February 28, 2003.  Given the Board's analysis, however, the result would not be affected if the period at issue were March 31, 2001 through February 28, 2003. 

ATB 2007-40