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Massachusetts Issues Final Directive on Applying Sales Tax To Third-Party "Deal-of-the-Day" Qualifying Promotional Vouchers

If you’re a frequent visitor to The State and Local Tax “Buzz”, you know that I’ve written several posts on the evolving state tax developments dealing with how states are opting to “tax” Groupon transactions.

Specifically, I’ve reported on the administrative guidance that various states have issued, dealing with whether a “deal-of-the-day” certificate or voucher, such as those marketed and distributed by companies like Groupon and LivingSocial are subject to sales tax when the “deal” voucher is sold.  I’ve also covered how the same states have decided sales tax should be calculated when a Groupon, LivingSocial or other “deal-of-the-day” certificate or voucher is redeemed for products or taxable services.

In general, states have followed two approaches. Some states have decided that sales tax is due on the full value (the undiscounted sales price) of the product or taxable service acquired when the subscriber presents their “deal-of-the-day” certificate or voucher to the participating merchant. Other states have decided that sales tax is due on an amount that takes into account the “discount” inherent in the voucher. For instance, states that are taking this approach say that if a customer purchases a deal-of-the-day voucher for $20.00 and that voucher is redeemed for products or meals which would normally cost $40.00, then the amount on which the merchant should calculate sales tax is $20.00, what the customer paid for the voucher, not $40.00. States that are taking this position, however, have stated that this “preferential” treatment depends on the type of voucher or certificate sold (New York, for example), or on whether the certificate or voucher meets certain other “qualifying” requirements such as certain language on its face (Massachusetts, for example).

I have recently authored an article, “Massachusetts Issues Final Directive on Applying Sales Tax To Third-Party “Deal-of-the-Day” Qualifying Promotional Vouchers”, which was published by the fine folks at Bloomberg BNA.  The article appeared in the publisher's, August 17th edition of its Weekly State Tax Report (electronic media) and in the publisher's August 24th edition of its monthly Multistate Tax Report.

The article has been reproduced with permission from the publisher. Today, I invite you to read, “Massachusetts Issues Final Directive on Applying Sales Tax To Third-Party “Deal-of-the-Day” Qualifying Promotional Vouchers”, for my analysis of Massachusetts’ final directive on how sales tax should be applied when “deal-of-the-day” certificates are used to purchase products or meals at Massachusetts retail establishments or restaurants.

The article, which has been posted to my company website, can be accessed here -> Massachusetts Issues Final Directive on Applying Sales Tax To Third-Party “Deal-of-the-Day”Qualifying Promotional Vouchers

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For more on Groupon and Sales Tax, see my prior journal and blog articles:



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