- Claiming the Bad Debt Reimbursement
- Restaurant Sales
- Store Sales
- Taxable Sales Price
- Payment of the Tax
- Abatements/Amended Returns
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts and Federal References
Massachusetts imposes a sales tax on meals sold by or purchased from restaurants or any part of a store considered by Massachusetts law to be a restaurant. The tax is 6.25 percent of the sales price of the meal. Generally, a food product commonly thought of as a grocery item is exempt from the sales tax on meals. More detailed information regarding the sales tax on meals is contained in Regulation 830 CMR 64H.6.5: Sales Tax on Meals. See below
Anyone who sells meals that are subject to sales tax in Massachusetts is a meals tax "vendor." If a liquor license holder operates a restaurant where meals are served, the holder of the license is presumed to be the meals tax vendor, whether the meals are served by the license holder or a concessionaire. Vendors must add a 6.25 percent sales tax to the selling price of every taxable transaction and collect it from the purchaser. The tax must be separately stated and separately charged on all invoices, bills, displays or contracts except on those solely for alcoholic beverages.
A "meal" is any food and/or beverage that has been prepared for immediate human consumption and provided by a restaurant or restaurant part of a store. A meal includes food or beverages sold on a "take out" or "to go" basis, whether or not they are packaged or wrapped, and whether or not they are taken from the premises of the restaurant.
A "restaurant" is any eating or drinking establishment, whether stationary or mobile, temporary or permanent, where food, beverages, or food products are provided and for which there is a charge. This includes, but is not limited to, all of the following:
- Coffee Shops
- Canteen trucks or wagons
- Catering businesses
- Cocktail lounges and bars
- Dining Rooms
- Hotel, motel dining rooms
- Ice cream trucks and food stands
- Lunch counters
- Private and social clubs
- Salad bars in grocery stores
- Snack bars
- Street wagons or carts
- Taverns and
- Vending machines that sell snacks or candy with a sales price of $3.50 or more.
A "store" is any establishment that is not primarily engaged in the business of selling meals. In general, food products for human consumption sold by stores are exempt from the sales tax. However, any store that contains an area, section or counter from which meals are sold must charge a sales tax on those meals. Such a store is considered to have a restaurant part. Examples of stores that may have a restaurant part include supermarkets, grocery stores, bakeries, delicatessens, convenience stores and markets.
In order to register, complete our online registration accessible from our MassTaxConnect home page. Businesses that register on or after September 1, 2003 must file returns and pay taxes electronically, regardless of the amount of their annual tax liability.
Previously registered businesses with combined annual withholding, sales/use tax (including sales taxes on meals and telecommunications services) and room occupancy excise liabilities of $10,000 or more are required to file returns and make payments electronically.
Claiming the Bad Debt Reimbursement
Massachusetts sales tax vendors who have remitted sales tax to DOR on accounts that are later determined to be worthless may file a claim for reimbursement with DOR. An account is determined to be worthless when it is written off as uncollectible for federal income tax purposes.
Reimbursements are paid annually without interest and may only be claimed on Form ST-BDR (or Form ST-BDR-Meals), Claim for Bad Debt Reimbursement. A claim for a vendor's prior fiscal year must be filed on or before the due date, including extensions, of the vendor's federal income tax return (or annual federal filing in the case of an exempt organization) for the prior fiscal year.
Vendors Are Not Allowed to Subtract Bad Debts from Gross Receipts:
Vendors must include in gross receipts for their Sales/Use Tax Returns, Sales Tax on Meals Returns and Sales/Use Tax on Telecommunications Services Returns all sales for the period in which the sales occur, regardless of whether payment has been received.
Any vendor who recovers, in whole or in part, a bad debt for which a reimbursement has been received must include the recovered amount in the gross receipts amount of the appropriate sales tax return covering the period in which the recovery occurs.
Documentation to Submit with Completed Form ST-BDR:
- if the federal income tax return is on extension, attach a copy of the appropriate federal application for extension form;
- document each worthless sale and provide an explanation listing the date the sale occurred, the amount of the sale, the buyer's federal identification number, (if available), and all facts pertinent to the determination that the account is worthless. vendors who are unable to separately document the portion of each worthless account which represents taxable Massachusetts sales may calculate the reimbursement on an aggregated basis. [TIR 92-2]
Note: If filing for Sales/Use Tax, as well as Sales Tax on Meals, complete two separate Forms use the current period form only.)
Sales to Exempt Entities:
Sales of meals to the following purchasers are not taxable:
- Meals sold to 501(c)(3) organizations:
Sales of meals to a religious, educational, charitable or scientific organization that is tax-exempt for federal purposes (exempt under Section 501(c)(3) of the Internal Revenue Code) generally are exempt if the organization uses the meals in the conduct of its exempt enterprise. To obtain the exemption, the purchaser must provide the vendor with:
- a properly completed Form ST-5, Sales Tax Exempt Purchaser Certificate ; and
- a copy of the exempt organization's Form ST-2, Certificate of Exemption, issued by DOR.
Note: (Form ST-2 is not available online.)
Example: A university holds meetings to plan alumni fund events. At these meetings the university provides meals, free of charge, to alumni who have agreed to solicit contributions to the fund for no compensation. As long as the vendors keep the required records (mentioned above), then the meals are exempt from the sales tax on meals.
- Meals furnished to elderly (golden age exemption) or handicapped persons:
Sales of meals to an organization of elderly or handicapped persons residing in certain subsidized housing are generally tax-exempt if:
- DOR has issued Form MT-4, Golden Age Meals Tax Exemption Certificate, to the organization; and
- the organization presents the vendor with a copy their unexpired Form MT-4 together with Form MT-5, Golden Age Meals Tax Exempt Purchaser Notice.
Note: (Forms MT-4 and 5 are not available online.)
- Meals sold directly to the U.S. or Massachusetts government:
Sales of meals directly to the U.S. or Massachusetts government, or persons, organizations or groups purchasing meals as agents on their behalf, are exempt.
Sales by Exempt Entities:
Sales of meals by the following organizations are not taxable:
- Sales of meals by health and day care facilities:
Sales of meals prepared by employees and served in a hospital, nursing home or licensed residential or day care facility.
- Sales of meals by educational institutions or summer camps:
Sales of meals to students by educational institutions or their agents and/or sales of meals by summer camps for children or developmentally disabled individuals.
- Hot lunch program for elderly persons:
Sales of government-funded meals served through qualifying school lunch programs to the elderly.
- Sales of meals by churches and synagogues:
Sales of meals prepared and served on the premises by members of a church or synagogue to its members and guests.
- Sales of meals by certain continuing care facilities:
Sales of meals to residents of certain continuing care facilities are tax-exempt. Continuing care facilities generally are residences that charge an up-front fee as full or partial consideration for room and board plus nursing or medical services. For more information, please see TIR 96-4, Sales Tax Exemption; Meals in Assisted Living Residences below
A "restaurant" is any eating or drinking establishment, whether stationary or mobile, temporary or permanent, where food, beverages, or food products are provided and for which there is a charge. Generally, the meals tax is imposed on the sale by a restaurant, or any part of a store that is considered to be a restaurant, of any food or beverage (including alcohol) that is prepared for human consumption in such a manner that it does not need any significant additional preparation or cooking to make it edible.
Exempt Restaurant Sales:
Certain food and beverages are not considered meals when sold by a restaurant for off-premises consumption, and their sales are not subject to the meals tax. These include:
- food sold by weight, liquid or dry measure, count or in unopened original containers or packages, such as meat products sold by the pound, provided that such foods are commonly sold in the same manner in a retail food store that is not a restaurant;
- beverages sold in unopened original containers when sold as a unit having a capacity of at least 26 fluid ounces;
- a loaf of bread;
- a quart of milk; and
- a prepackaged pint, quart, half gallon, etc. of ice cream, provided that such foods are commonly sold in the same manner in a retail food store that is not a restaurant. (Hand packed ice cream, regardless of size, is taxable.)
A "store" is any establishment that is not primarily engaged in the business of selling meals. In general, food products for human consumption sold by stores are exempt from the sales tax. However, any store that contains an area, section or counter from which meals are sold must charge a sales tax on those meals. Such a store is considered to have a restaurant part.
A meal includes food or beverages that do not require further significant preparation, whether or not they are packaged or wrapped and whether or not they are taken from the premises where purchased. Examples of stores that may have a restaurant part include bakeries, delicatessens, grocery stores, markets, supermarkets, and convenience stores. For more information on a store not specifically mentioned, please call DOR's Customer Service Bureau at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089.
When a bakery sells food items commonly sold at snack bars, coffee shops or luncheon counters, such as taxable beverages or sandwiches, the entire bakery is considered a restaurant, and its sales of, baked goods are taxable except when sold in units of six or more for, off-premises consumption. Baked goods in units of six or more includes any variety of items totaling six or more servings, for example: two bagels, three muffins and one danish; or one whole pie, cake, loaf of bread, etc.
A delicatessen generally is considered a store with a restaurant part. Prepared foods including meat, poultry or fish items, for example, fried chicken or barbecued spare ribs are taxable if sold heated. Sandwich meats or cheeses (sliced or whole) and whole cooked meat, poultry or fish sold unheated are not taxable.
- Grocery Stores, Markets, Supermarkets:
Sales from the bakery or delicatessen section of a grocery store, market or supermarket are taxed as previously described; sales of food products (groceries) are not taxable. However, a supermarket salad bar where shoppers purchase salads and pay by weight is a restaurant for purposes of the meals tax. Therefore, the salad is subject to tax. Generally, the sale of prepared meat, poultry or fish items, including meat, poultry or fish parts or pieces, such as fried chicken wings or barbecued spare ribs, heated or in a combination plate is taxable.
- Convenience Stores:
A convenience store's sales of the following items are taxable:
- poured or fountain-type beverages;
- combination plates sold as a unit reasonably and commonly considered a meal, whether or not heated;
- single-portion entrees such as lasagna, eggplant parmigiana or quiche, heated, or refrigerated if the store provides a heating unit, and whether or not prepackaged;
- heated prepared foods;
- quick meals, such as hot dogs, hamburgers, pizza or soup, heated, or refrigerated if the store provides a heating unit, and whether or not prepackaged;
- sandwiches, whether or not prepackaged or heated; and
- unpackaged snacks such as fresh-popped popcorn.
- Video Stores:
A video store's sales of poured or fountain-type beverages or of unpackaged snacks, such as fresh-popped popcorn, are taxable. Prepackaged snacks sold at a video store are not taxable.
- Honor Snack Trays and Vending Machines:
Honor snack trays and vending machines that sell food generally are considered restaurants for purposes of the meals tax. An exception is made, however, when the honor tray or vending machine is used to sell only snacks (food or beverage) or candy with a sales price of less than $3.50. If the sales price of any single item sold through an honor tray or vending machine is $3.50 or more, all sales are then taxable.
Exempt Store Sales:
The following items sold in stores are not taxable
- Beverages sold in unopened original containers for off-premises consumption, whether purchased separately or in combination with other foods.
- Prepackaged snacks and prepackaged baked goods such as popcorn, chips, candy, ice cream, prepackaged pastries, novelties, etc. for off-premises consumption. Prepackaged means packaged in a sealed, unopened original container intended and marked by the manufacturer for individual sale.
- "Party packs" and "party platters" including an assortment of meats, poultry or cheeses sold by weight or count, cut and arranged on platter(s), sold with other foods and designed to serve a number of people. Nonfood items sold as part of a party pack or party platter, such as paper plates and plastic cutlery, are subject to the sales tax. If the vendor does not separately state the charge for these items, and collect and pay over the tax, the vendor must pay the use tax on the cost to the vendor of the nonfood items.
Taxable Sales Price
Generally, the sales tax imposed on a meal is based on the sales price of that meal. In certain circumstances, the sales price of a meal upon which the tax is imposed may include the tip, or related room rental or recreational admission charges. The following list outlines situations where these items are considered taxable:
Generally, gratuities, service charges or tips added by the restaurant to the price of a meal are included in the taxable sales price if they are part of the consideration paid for the meal. However, if the exact amounts of gratuities, service charges or tips are segregated as a separate fund (shown separately in the business' records supported by invoices) for the employees actually providing the services and are distributed in their entirety almost immediately to those employees, they are not included in the taxable sales price of the meal. If the gratuities or service charges are paid only in part to the wait staff or other service personnel, or are used in whole or in part to pay their wages, the charges are included in the sales price of the meal and are subject to the sales tax.
- Room rentals for serving meals:
If a room is rented for the purpose of serving a meal, and a meal is provided by the operator of the room, the charge for the room is included in the price of the meal subject to the tax, whether separately stated or not. If a room is rented for purposes other than serving a meal, and light refreshments are provided, the sales tax only applies to the sales price of the refreshments if the charge is stated separately on both the records of the vendor and the bill to the customer. If the charges are not separately stated, the entire amount charged is subject to the sales tax.
- Admission charges for entertainment or recreation:
The sales tax is imposed on admission charges collected by a place of entertainment where food and/or alcoholic beverages are sold, unless all of the following requirements are met:
- a ticket is sold and collected as evidence of the admission charge;
- the patron is not required to purchase any food or beverages;
- the charge is for admission only and does not include any payment for food or beverages; and
- the admission charges are segregated from other receipts in the books and records of the place of entertainment.
- Discounted meals:
If a vendor offers customers, upon presentation of a coupon, a discount from the usual price of a meal, the sales price subject to tax is the actual amount the vendor charges the customer.
- Package plan:
A "package plan" is an arrangement for a private function, sold for a single price which includes a meal or meals, other activities such as entertainment, or other items such as place settings, flowers, or prizes, and may or may not include the rental of a function room. The charge for a room rented for the purpose of serving a meal is part of the total cost of providing meals and is included in the sales price of the meal subject to meals tax whether or not the charge is separately stated. If other various charges included in a package plan are mandatory, the meals tax is imposed upon the total amount charged for the package plan, whether or not the charges are separately stated. However, if the various charges (other than room rental) are not mandatory and the vendor of the package plan separately states and reasonably allocates the sales price of the meals and the other items or activities on both the bill to the customer and on the vendor's books and records, the meals tax is imposed only on the sales price of the meals, including the charge for the room rented.
Payment of the Tax
Vendors must complete and remit the appropriate sales tax on meals return(s) to DOR, with payment in full, on or before the due date.
Filing Frequency and Payment Requirements:
Every vendor of meals must file a sales tax on meals return and pay the tax due for each calendar month on or before the twentieth day of the following calendar month.
Return Filing Methods:
MassTaxConnect, or Form ST-MAB-4, Sales Tax on Meals, Prepared Food and/or Alcoholic Beverage Return .
Electronically (ACH Debit only) or by check (if not required to file/pay electronically).
Please see Business Options: Electronic Filing and Payment Programs for more information on the various electronic payment and filing options.
MassTaxConnect participants can use the “amend” feature to make changes to previously filed withholding, sales and use tax (including sales tax on meals) and room occupancy tax returns through their MassTaxConnect account. Business taxpayers can also use MassTaxConnect to dispute an audit finding or a penalty by choosing "File a Dispute" under "I Want To" in their account for each tax type.
Keep in mind that some taxpayers are required to file amended returns and applications for abatement electronically. Refer to TIR 15-9, Electronic Filing and Payment Requirements Extended to Additional Tax Types, to see if the electronic filing and payment requirements apply to you.
If you are not required to file electronically, you can check the amended return box on your paper return and file it the way you usually do to amend a previously filed return, or file Form ABT , Application for Abatement, to dispute an audit finding, dispute a penalty, or dispute a responsible person determination. (Note that Form ABT must be used to dispute a Responsible Person determination.)
Vendor, Not Purchaser, May Apply for an Abatement:
Massachusetts requires vendors to collect the sales/use tax, sales tax on meals and/or sales tax on telecommunications services. Because the vendor, and not the purchaser, actually pays over the tax to the Commonwealth, only the vendor is authorized to apply for an abatement of the tax. A purchaser may request a credit or refund from the vendor who should then file an abatement claim.
- copies of all invoices related to the Abatement/Amended Return;
- copies of credit memos, or proof of refund/credit to customers;
- copies of the appropriate Exemption Certificate(s):
Note: For United States and Commonwealth of Massachusetts Government entities who do not present Form ST-5, Sales Tax Exempt Purchaser Certificate, a copy of the Government check or credit card sales receipt must be provided. [see AP 101 below]
Note: If filing for Sales/Use Tax, as well as Sales Tax on Meals, complete two separate Forms (use the current period form only.)
- M.G.L. Chapter 62C, Section 40
- M.G.L. Chapter 64H, Section 6
- 830 CMR 62C.16.2: Sales and Use Tax Returns and Payments
- 830 CMR 64H.6.5: Sales Tax on Meals
- TIR 09-11: Change in Rate, Scope, and Computation of Sales/Use Taxes
- TIR 04-30: Revised Electronic Filing Requirements
- TIR 03-11: Expansion of Mandatory Electronic Filing
- TIR 99-9: Tax Treatment of Purchases with U.S. Government Bankcards
- AP 102: Diplomatic/Consular Exemptions
- AP 101: Exemption from Sales Tax
- I.R.C. § 166
Bad Debt Reimbursement
- M.G.L., Chapter 64H, Section 33 as amended by St. 1998, c. 485, ss. 20, 23
- TIR 00-3: Claiming the Bad Debt Reimbursement
- TIR 92-2: Claiming the Bad Debt Reimbursement
The language concerning due dates and the period covered by a claim was amended effective January 1, 1999. Since TIR 92-2 was issued on March 27, 1992, it does not reflect this change.
- I.R.C. § 166