June 9, 1982

Your Company owns and operates ********** Restaurants ("restaurants") in Massachusetts. You inquire about the computation of the Massachusetts sales tax on meals when the restaurants offer the following discount and coupon sales to their customers:

(1) discounts for special groups such as senior citizens, Boy Scouts and Girl Scouts;

(2) a discount from the usual price of the food if customers purchase both a sandwich and salad;

(3) coupons entitling customers to free food;

(4) coupons entitling customers to a discount from the usual price of the food. The customers get such coupons in the mail or from newspapers. The restaurants are not reimbursed by the customers or any third party for these coupons;

(5) coupons entitling customers to two hamburgers for the usual price of one. The customers receive such coupons when they make a purchase from a charitable organization. You do not state whether the restaurants are reimbursed for the coupons.

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, valued in money or otherwise." 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.

Based on the foregoing, it is ruled that:

1. Where the restaurants offer customers a discount from their usual price and no coupon is required, the sales price subject to tax is the actual amount paid.

2. where the restaurants offer customers free food upon presentation of a coupon for which the restaurants receive any reimbursement, the sales tax is levied on the usual sales price of the meals.

3. Where the restaurants offer customers a discount from their usual price upon presentation of a coupon received in the mail or clipped from a newspaper, and the restaurants receive no reimbursement for the coupon, the sales price subject to tax is the actual amount paid by the customer.

4. Where the restaurants offer customers a discount from their usual price upon presentation of a coupon received upon making a purchase from or donation to a charitable organization, and the restaurants receive any reimbursement for the coupon from the organization or from any other party, the sales tax is levied on the usual sales price of the meals. If, however, the restaurants receive no reimbursement for the coupon from any source, the sales price subject to tax is the actual amount paid by the customer.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

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LR 82-62