Massachusetts – Certain Sales In Restaurant Area Within Supermarket Not Subject To Sales and Use Tax Per Letter Ruling 20-1

Issue: Whether Supermarket must charge tax on otherwise tax-exempt supermarket products purchased at cash registers located in restaurant areas, assuming Supermarket implements various controls to separately track sales of meals and otherwise tax-exempt items, as further described below.

Ruling: Assuming that Supermarket implements the various controls to separately track sales of meals and otherwise tax-exempt items as represented in this ruling, otherwise tax-exempt supermarket products are not subject to tax when purchased at a cash register in one of Supermarket’s restaurant areas.

In recent years, Supermarket’s customers have increasingly completed purchases at those registers consisting of both meals offered for sale in the restaurant areas and supermarket products offered for sale in its conventional supermarket areas. Under Supermarket’s plan to implement various controls to separately track the sales of meals and supermarket products at all cash registers in its supermarket establishments, otherwise tax-exempt supermarket products will not be subject to tax when processed through a cash register in Supermarket’s restaurant areas.

The supermarket establishments historically have consisted principally of a supermarket area, from which food products and household items (“supermarket products”) are offered for sale, traditional bakery and delicatessen areas, and restaurant parts. Recently, Supermarket has opened supermarket establishments in more densely populated city locations.  In order to use the limited space in such establishments efficiently, Supermarket has created certain new restaurant parts that exclusively sell meals, including coffee and single-serve pastries, in the middle of the establishment (“restaurant areas”).  These restaurant areas have their own designated space within the store, with their own counters and serving areas.  Some of these restaurant areas may also include a cash register.

For more information: Massachusetts Department of Revenue

Massachusetts department of revenue
april 24, 2020