January 5, 1981
********** Corporation ("Company") operates a chain of restaurants that specialize in sales of ice cream for consumption on and off the restaurant premises. The Company sells gift certificates to be redeemed at the restaurants. You inquire whether the Company's purchase of the gift certificates from a printer is subject to the sales tax.
Massachusetts General Laws Chapter 64H, Section 2 imposes an excise upon "sales at retail of tangible personal property." Section 1(13) of Chapter 64H defines "sale at retail" as "a sale of tangible personal property for any purpose other than resale in the regular course of business," and Section 1(15) provides that "tangible personal property" is
"personal property of any nature consisting of any produce, goods, wares, merchandise and commodities whatsoever,...but shall not include rights and credits, insurance policies, bills of exchange, stocks and bonds and similar evidences of indebtedness or ownership."
The "sales price" to which the tax applies is "the total amount paid by a purchaser to a vendor as consideration for a retail sale, valued in money or otherwise." Chapter 64H, Section 1(14).
Based on the foregoing, it is ruled that the Company is the consumer of the gift certificates and must pay the sales tax when purchasing them from the printer. The Company's transfer of the certificates to its customers is not a sale of "tangible personal property" within the meaning of Chapter 64H, Section 1(15); its purchase of the certificates therefore is not a purchase of tangible personal property for resale.
When the Company makes a sale of a meal or other taxable sale, and the purchaser presents a gift certificate in lieu of cash, the "sales price" includes the face value of the certificate as well as any cash or other consideration paid.
Very truly yours,
/s/L. Joyce Hampers
L. Joyce Hampers
Commissioner of Revenue
LR 81-4