May 18, 1984

You request a ruling as to the application of the sales tax to discounts given to customers who pay their bills within a specified period to __________ ("Company"). The Company sells concrete and offers a $2.00 per cubic yard discount if payment is received within the specified period. You wish to know whether the sales price subject to the sales tax should be reduced by the amount of the discount.

A five percent tax is imposed on the sales price of retail sales of tangible personal property. (G.L. c. 64H, § 2). In determining the sales price, cash discounts allowed and taken on sales are excluded from the amount paid. (G.L. c. 64H, § 1(14)(c)(i)). If a cash discount is allowed at the time of the sale, the discount is excluded from the sales price. However, discounts given to customers after the time of sale, such as discounts for early payment for credit purchases, are included in the sales price.

Based on the foregoing, it is ruled that the $2.00 per cubic yard discount offered by the Company for early payment is not excluded from the sales price subject to the sales tax.

Very truly yours,

/s/Ira A. Jackson
Commissioner of Revenue

IAJ:JES:mf

LR 84-30