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Tax Law

It’s In The Way That You Use It: Massachusetts Supreme Judicial Court Applies “Great Integral Machine” Doctrine

The Supreme Judicial Court of Massachusetts held that pipes and appurtenant equipment used by a taxpayer to produce, store and distribute steam for heating and power generation were exempt from local personal property tax as manufacturing property. Affirming the Appellate Tax Board, the court applied the “great integral machine” doctrine to find that the pipes and appurtenant equipment comprised an integral part of the taxpayer’s steam production and distribution system, thereby qualifying for the manufacturing exemption. Notwithstanding the local board of assessors’ argument that the manufacturing exemption statute specifically excludes “underground conduits, wires and pipes,” the court reasoned that the statutory exclusion does not abrogate the doctrine, which “has endured without legislative interference for well over one hundred years” and “enjoys continued vitality.” In reaching its decision, the court noted that it accorded the Appellate Tax Board’s decision “great deference” and will not disturb the board’s decision if it is based on “substantial evidence and correct application of the law,” as the board is an agency charged with administering the tax law and it has expertise in tax matters.

Veolia Energy Boston, Inc. v. Board of Assessors of Boston, 130 N.E.3d 767 (Ma. 2019)