Patricia Campbell Malone
Massachusetts Department of Revenue (DOR) Commissioner Frederick A. Laskey announced today that the DOR has amended its regulation on discounts, coupons and rebates, resulting in a change in the taxability of manufacturers' coupons and rebates applied at the time of sale. The effect of the change will be that retail customers will pay less sales tax in many situations.
The current regulation excludes the reduction in a product's sales price attributed to discounts and coupons issued by retailers from the sales price in determining the applicable sales tax. Any reduction in a product's sales price attributed to a manufacturer's coupon or rebate is included in the sales price subject to tax. The new regulation, which will become effective Monday, May 1, 2000, treats most manufacturers' coupons and rebates the same as retailers' coupons and discounts.
"The new regulation is a common sense approach to the treatment of coupons, benefiting both consumers and retailers by eliminating the confusing nature of the current policy," said Laskey. "While manufacturers' coupons for many items, including most food and clothing products, will not be affected by the regulation because the items are not subject to the sales tax, taxable items sold by retailers, including automobiles and appliances, will be affected."
"For example, if a consumer is purchasing a car and is offered an on-the-spot manufacturers' rebate, the consumer no longer will have to pay sales tax on the pre-rebate price. Because manufacturers' rebates often are worth thousands of dollars, this regulatory change may mean hundreds of dollars of savings for the buyer," Laskey said.
A copy of the new regulation, 830 CMR 64H.1.4: Discounts, Coupons and Rebates, may be obtained by calling our Customer Service Bureau at (617) 887-6367 or toll-free in Massachusetts at (800) 392-6089.