As the result of a referendum question on the November 2, 2010 ballot, the law extending the Massachusetts sales and use tax to alcoholic beverages sold at package stores and liquor stores for off-premises consumption, which was enacted on August 1, 2009, has been repealed, effective for sales on or after January 1, 2011. TIR 09-11 is superseded to the extent it is inconsistent with this TIR, which is effective January 1, 2011.

The ballot provision approved by Massachusetts voters reinstates the sales tax exemption in G.L. c. 64H, § 6(g) for alcoholic beverages subject to the excise under chapter 138. The full text of the approved ballot question is as follows:

Be it enacted by the People, and by their authority as follows:

Section 1. Notwithstanding the provisions of any general or special law to the contrary, alcoholic beverages subject to the excise tax imposed by Chapter 138 of the General Laws shall be exempt from sales tax, and to that end, Section 6(g) of Chapter 64H of the General Laws, as most recently amended by St. 2009, c. 27, § 55, is hereby amended by striking out the words "and 64F" and inserting in place thereof the following words: -64F and 138.

Section 2. Section 1 shall take effect on January 1, 2011.

The state and local (as applicable) sales tax on meals, including alcoholic beverages sold for on-premises consumption, as described in G.L. c. 64H, § 6(h) is unchanged by this repeal. Bars, restaurants and caterers must continue to collect and remit sales tax on meals including any charges for alcoholic beverages. Liquor stores acting as caterers as described in Letter Ruling 09-8 also must continue to collect and remit state and local (as applicable) tax on alcoholic beverages sold under catering agreements, including bartending and set-up fees, whether or not separately stated. See DD 06-3 for general rules applicable to catering businesses, which are also unchanged.

This change in the sales and use tax law does not change or amend existing prohibitions and restrictions in the Liquor Control Act, G.L. c. 138. Questions about the Liquor Control Act should be directed to the Alcoholic Beverages Control Commission at (617) 727-3040. See www.mass.gov/abcc.

In applying the new electronic filing requirements described in TIR 10-18, sales of alcoholic beverages will be excluded in determining if a vendor meets the $5,000 threshold. Any vendor who receives an electronic filing notice in error or has questions concerning these requirements should contact DOR Customer Service at (617) 887-MDOR.

/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue

NKB:MTF:ecl

December 14, 2010

TIR 10-24