I. Introduction:

This Technical Information Release explains a new sales tax exemption for meals provided to residents of continuing care facilities.

II. Statutory Authority:

Massachusetts imposes a five percent excise upon all retail sales of tangible personal property and telecommunications services in Massachusetts by a vendor unless otherwise exempt. G.L. c. 64H, §§ 1, 2. Sales of food products for human consumption are exempt. However, meals sold by a restaurant are subject to tax. The definition of restaurant generally includes any place or establishment where food or beverages are provided and for which a charge is made. See G.L. c. 64H, § 6(h). Meals prepared by employees of and served in hospitals, sanitariums, convalescent or nursing homes, or boarding homes for the aged licensed by the Department of Public Health under G.L. c. 111, § 71, are exempt. Meals served in facilities licensed by the Department of Mental Health under General Laws Chapter 19 are also exempt. See G.L. c. 64H, § 6(cc). Section 22 of Chapter 495 of the Acts of 1993, effective January 14, 1994, adds the following exemption to G.L. c. 64H, § 6(cc): "meals served to a resident in a facility providing continuing care to an individual which facility must provide a disclosure statement to a prospective resident as required by § 76 of Chapter 93."

III. Discussion:

This exemption applies only to meals served on or after January 14, 1994 to certain residents of continuing care facilities. Continuing care is defined in Chapter 93, § 76, as an arrangement whereby:

A. A provider furnishes board and lodging to residents together with nursing services, medical or other health related services pursuant to a contract effective for the life of an individual or for a period in excess of one year; and

B. For which an entrance fee has been paid as full or partial consideration for acceptance of a specified individual as a resident in the facility, which fee must exceed four times any periodic fees for board, lodging, medical or other health related services rendered by the provider to the resident.

For purposes of this sales tax exemption, a continuing care facility is one in which nursing and medical care is available at the facility on a regular basis and the majority of residents of the facility (exclusive of any portion of the premises licensed as a convalescent or nursing home under G.L. c. 111, § 71) have paid an entrance fee as defined in G.L. c. 93, § 76. Continuing care facilities must register as meals tax vendors if they sell meals to guests of residents, staff or any other persons who have not paid an entrance fee for continuing care, as defined in G.L. c. 93, § 76.

/s/ Mitchell Adams
Mitchell Adams
Commissioner of Revenue

April 12, 1994

TIR 94-6