May 5, 1980

You inquire whether discounts allowed for early payment (as, for example, 2 percent discounts for payment within 10 days) are part of the sales price of property subject to Massachusetts sales tax.

Massachusetts General Laws Chapter 64H, Section 1(14) defines "sales price" as "the total amount paid by a purchaser to a vendor as consideration for a retail sale..." Section 1(14)(c)(i) of that Chapter provides that, in determining the sales price, "cash discounts allowed and taken on sales" shall be excluded. Discounts for early payment are not considered "cash discounts on sales" for purposes of Section 1(14)(c)(i). At the time of sale it is not clear whether such discounts will be taken by the purchaser.

Based on the foregoing, it is ruled that discounts for early payment may not be excluded in determining the sales price subject to Massachusetts tax.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/JXD/jmcd

LR 80-19