Chapter 9-4 Tax Exemptions transferee from the state or territory in which the sale of transfer occurred as proof that the tax was previously paid by the purchaser or transferee. 4. If this exemption applies and if the rate of tax imposed by the state or territory in which the vehicle was sold or transferred is less than the rate imposed by Massachusetts, the purchaser or transferee must pay a use tax computed by multiplying the sales price of the vehicle by the difference between the Massachusetts rate and the rate imposed by the state or territory in which the vehicle was sold or transferred. The tax must be paid pursuant to 830 CMR 64H.25.1(4) and (5). The following text is effective 12/27/96 Examples: The following examples illustrate the application of 830 CMR 64H.25.1(7)(g); Example 1: Mr. Jones is a resident of State X, which has no sales or use taxes. Mr. Jones purchases a motor vehicle in State X, where he registers it and uses if for three months. He then moves to Massachusetts and registers the vehicle in Massachusetts. Mr. Jones must pay a 6.25% use tax in Massachusetts because he did not pay a sales or use tax on the vehicle in State X. Example 2: Mr. Right lives in Massachusetts. While vacationing in State Z, Mr. Right purchases a motor vehicle for $10,000 and thereafter brings it to Massachusetts. Under the sales and use tax laws of State Z, Mr. Right is required to pay a rate of 4% of the sales price (or $400). State Z honors the sales and use tax laws of Massachusetts and does not impose its sales and use tax on vehicles which are purchased and taxed in Massachusetts. Mr. Right must pay a use tax to Massachusetts, but the tax is computed on the sales price multiplied by the difference between the Massachusetts rate (6.25%) and the rate of tax in State Z (4%). The use tax is therefore $10,000 x 1.25% or $125. 6/97 9:30