Technical Information Release

Technical Information Release TIR 87-1: Changes in the Sales Tax

Date: 03/13/1987
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Sales and Use Tax

Chapter 488 of the Act of 1986 changed the sales tax law on returned merchandise. It also exempted from the sales tax snacks, including beverages, and candy sold in vending machines for less than one dollar. These changes took effect on January 23, 1987. The new law also exempted all items purchased with food stamps. This change took effect on October 1, 1986.

I. Refund of Sales Tax on Returned Merchandise

The new law makes a number of changes affecting returned merchandise under G.L. c. 64H, § 1(14)(c)(ii). A purchaser may now obtain a refund of the sales tax on returned merchandise even if the vendor charges or retains a handling fee.

There are separate procedures for obtaining a refund of tax paid on a motor vehicle and on merchandise other than a motor vehicle. To get back the tax paid on merchandise other than a motor vehicle, the purchaser must return the merchandise within 90 days from the date of sale and obtain the refund from the vendor. To get back the tax paid on a motor vehicle, the purchaser must return the motor vehicle within 180 days of the date of sale and apply for an abatement of tax. This is done by filing Form CA-6 with the Abatement Bureau of the Department of Revenue.

The purchaser of a motor vehicle or other merchandise is entitled to get the tax money back whether or not the vendor refunds the amounts paid (less any handling fee) within the prescribed time limits. The new provision preserves the consumer's right to a tax refund when a dispute over the return delays final settlement beyond the 90- and 180-day time limits.

II. Vending Machines Selling Only Snacks or Candy with a Sales Price of Less Than One Dollar

If a vending machine sells only snacks with a sales price of less than one dollar, or candy with a sales price of less than one dollar, or both snacks and candy with sales prices of less than one dollar, then sales by the vending machine will not be subject to the sales tax on meals. Sales of snacks and candy by restaurants other than vending machines are subject to tax regardless of sales price. For purposes of this amendment of G.L. c. 64H, § 6(h) only, a snack is any food (other than candy) or beverage sold by a vending machine with a sales price of less than one dollar.

The sales price of food sold by a vending machine includes any subsidy or service fee. See G.L. c. 64H, § 1(14). If the sales price of a candy or snack item sold by a vending machine is one dollar or more, including any subsidy or service fee received by the vendor, then regardless of the price displayed on the vending machine and paid by the consumers for the candy and snacks, the sales price of the candy or snack is considered to be more than one dollar.

III. Exemption of Sales of Items Purchased with Federal Food Stamps

The new law exempts from sales tax sales of items purchased with federal food stamps which are not otherwise exempt under G.L. c. 64H. A vendor who operates a food store or program which participates in the federal food stamp program must substantiate its food stamp sales on its books and records.

/s/Ira A. Jackson
Ira A. Jackson
Commissioner of Revenue

March 13, 1987

TIR 87-1

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