October 5, 1977

In your recent letter, you inquired as to the taxability of discount coupons redeemed in connection with the retail sale of tangible personal property. In Massachusetts, the sales tax statute is clear and unambiguous in this regard and the sales tax is imposed on the list price before the allowance for the redeemed coupon.

The Massachusetts Sales Tax is found in General Laws Chapter 64H. Section 1(14) thereof defines "Sales price" as "the total amount paid by a purchaser to the vendor as consideration for a retail sale, valued in money or otherwise". Simply stated, the coupon is the "otherwise" in this definition and is part of the consideration for the retail sale. The result would be the same whether or not the retailer is reimbursed by the distributor, manufacturer or any other third party for the product described in the coupon and irrespective of the method of invoicing used.

Therefore, in Massachusetts, the sales tax is imposed on the list price before the allowance for the redeemed coupon.

Very truly yours,

/s/Owen L. Clarke

Owen L. Clarke
Commissioner of Corporations
and Taxation

LR 77-17