Sales Tax on Meals

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 license holder is presumed to be the meals tax vendor, whether the meals are served by the license holder or a concessionaire.

Vendor responsibilities

Massachusetts meals tax vendors are responsible for:

• Registering with DOR to collect the sales tax on meals
• Collecting a 6.25% sales tax (and, where applicable, a 0.75% local option meals excise) on all taxable sales of meals
• Paying the full amount of tax due with the appropriate Massachusetts meals tax return on time, and
• Keeping complete, detailed and accurate records of gross receipts from all sales, taxable or not.

Out-of-state vendors who sell meals in Massachusetts generally have the same responsibilities as Massachusetts vendors.

After registering with DOR, you will receive a Meals and All Beverages Sales Tax Registration Certificate (Form MT-1) for each business location. The certificate must be displayed on the business premises where customers can easily see it.

Collecting and sending sales tax on meals

As a meals tax vendor, you must add a 6.25% sales tax (and, where applicable, the 0.75% local option meals excise) to the selling price of every taxable transaction and collect it from the buyer. The tax must be separately stated and separately charged on all invoices, bills, displays, or contracts except on those solely for alcoholic beverages.

You must complete and send the appropriate sales tax return(s) to DOR, with payment in full, on or before the 30^th day following the month represented by the return. For more information, visit New Due Date for Sales and Use Tax Returns.

Also, see more details on filing and paying in Filing & Paying Sales Tax on Meals.

Reporting taxable cash and credit transactions

Effective for the tax period beginning January 1, 2022, you must report the amount of cash and credit sales for meals (food and beverages, including alcoholic beverages) separately on the appropriate lines of your meals tax return (Line 1a for cash sales of meals; Line 1b for credit sales of meals).

Keeping meals tax records as a vendor

As a meals tax vendor, you must keep:

• Complete and accurate records of the gross receipts from all sales, taxable or nontaxable, and
• Copies of tax returns together with any supporting information necessary to verify the returns' accuracy.

Sufficient records provide you with evidence of each transaction and must include:

• Cash register tapes showing each transaction, it's helpful to keep separate registers (or 1 register with separate keys) for restaurant and non-restaurant activities.
• Alcoholic beverages bar checks (if applicable)
• Dining room meals checks
• A separate daily receipts book or record for taxable and nontaxable sales
• Copies of filed sales tax on meals returns.

Point of Sale (“POS”) systems used by vendors must ensure that each transaction is recorded in sufficient detail to independently determine the taxability of each sale and the amount of tax due and collected. Detailed information required for each sales transaction includes, but is not limited to the:

• Individual item(s) sold
• Selling price
• Tax due
• Invoice number
• Date of sale
• Method of payment, and
• POS terminal number and POS transaction number.

DOR may request POS system records retained in an electronic format, as well as any and all records relating to the automated data processing of the POS system. See Recordkeeping Requirements for Sales and Use Tax Vendors Utilizing Point of Sale (POS) Systems for more information.

Vendors using a POS system must report the type of POS system that they use on their meals tax returns by selecting one from a drop-down list provided by DOR. Vendors whose POS system does not appear on this list, or who use a cash register, must select “None.” Failure to make a selection will prevent the processing of your tax return.  A complete list of POS options can be found on DOR’s website. 

Dining room meals checks must be numbered serially and used in sequence for all meals sold, with no number being repeated for a 1-year period. They must have the name and address of the vendor and the wording: "6.25 Percent Mass. Sales Tax on Meals" with a space opposite this statement for insertion of the amount of the tax.

You can (but aren't required to) show the amounts of state and local taxes on meals as separate line items. If the state and local tax are combined, the sales check should describe that line as "state and local tax" or the menu should have a note saying that the state tax of 6.25% and local tax of .75% totaling 7% are added to the total price of the meals. All dining room meals checks must be securely tied and preserved in dated, daily bundles. The daily tax recordings must be entered in your records to substantiate the return for sales tax on meals.

Caterers must record all catering business transactions in a reservation ledger or book, stating for all meals served, all:

• Dates of jobs
• Names of purchasers
• Numbers of persons served
• Price totals, and
• Proper amount of tax

Caterers who don't use dining room meals checks must number bills or contracts serially and keep them with the reservation book or ledger.

Records must be kept for at least 3 years from the date the return was filed or the date it was required to be filed, whichever is later. Returns may also be audited for up to 6 years for understating by more than 25% of the tax that should have been reported on a return. If you fail to file a return or file a false or fraudulent return, DOR may request records at any time.

Requirements

Vendors collecting and sending sales tax on meals must file monthly returns. Returns are due on or before the 30^th day following the month represented by the return. For more information, visit New Due Date for Sales and Use Tax Returns.

You must file a return for all periods, even when no tax is due - just enter 0 in the appropriate places.

Effective for returns for tax periods beginning on or after January 1, 2022, and any late-filed returns for earlier periods, you must file sales tax on meals returns and make payments electronically.

Advance payment requirements for Meals tax

Beginning April 2021, taxpayers with over $150,000 in cumulative tax liability in the prior year will be required to make advance payments. To learn more, visit New Advance Payment Requirement for Vendors and Operators in G.L. c. 62C, § 16B.

Submitting returns and payments

An electronically filed return or report is considered timely filed if it's electronically submitted (with all accurate required information) on or before the due date, before 12:00 a.m. EST. After submitting it, you'll receive a confirmation number and time-and-date stamp, which proves time and filing date.

Correcting reporting errors

MassTaxConnect users can use the “amend” feature to change previously filed sales tax on meals returns, and may 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.

Penalties and interest charges

There are interest and penalty charges for not filing sales/use tax returns on or before the due date.

• The penalty for late payment is 1% of the unpaid tax shown on the return per month (or fraction thereof), up to a maximum of 25%.
• The penalty for failing to file a return by the due date is 1% of the balance due per month (or fraction thereof), up to a maximum of 25%.

If you fail to pay the tax when due, you'll also be charged interest at the federal short-term rate (which can change quarterly) plus 4%, compounded daily. Contact DOR's Contact Center at (617) 887-6367 or toll-free in Massachusetts at (800) 392-6089 for more information on these rates.

If you underpay the sales tax on meals due to neglecting or disregarding tax laws, or substantially understate a tax liability on a return, you may be subject to a penalty of 20% of the underpayment if the underpayment exceeds 10% of the tax required to be shown on the return or $1,000, whichever is greater. See TIR 06-5 for more information.

Willful tax evasion is a felony punishable by a fine up to $100,000 for individuals or $500,000 for corporations and/or imprisonment for up to 5 years.

Willful failure to collect and pay over taxes is also a felony and is punishable by a fine up to $10,000 and/or imprisonment for up to 5 years.

Taxpayers who do not comply with the requirements to file returns, make payments or electronically submit data to DOR will be penalized up to $100 for each return, payment or data transfer they submitted incorrectly. See Penalty for Failure to File, Report or Pay in the Prescribed Format, and DOR e-filing and payment requirements for more information.

Taxpayers who use a POS system and purchase, install, transfer, maintain, repair or possess an automated sales suppression device or phantom-ware will be subject to a civil penalty of not more than $10,000 for the first offense and not more than $25,000 for each subsequent offense. To find out more information, see TIR 21-4. 

Meals provided by restaurants

Generally, a restaurant, or any part of a store that is considered to be a restaurant, imposes the meals tax on the sale of any food or beverage (including alcohol) that is prepared for human consumption in a way that it doesn't need any significant additional preparation or cooking to make it edible.

Example: If a restaurant serves a patron a lasagna dinner, then the dinner is taxable. However, if the restaurant also sells frozen lasagna dinners that patrons heat in their own homes, those frozen dinners aren't considered meals and therefore aren't taxable because they need additional preparation.

Example: If a patron buys a pizza and 2 cans of soda from a restaurant, then both the pizza and sodas are taxable. However, if they buy a pizza and a 2-liter bottle of soda to go, then the pizza is taxable, but the bottle of soda is exempt since it was sold in an unopened original container of at least 26 fluid ounces.

Meals provided by other establishments

Any store not ordinarily considered a restaurant must also charge a sales tax on certain food items if those items are sold in a way that they can be considered a meal. A meal includes food or beverages that don't need further significant preparation, whether or not they are packaged or wrapped and whether or not they are taken from the place where they were bought. The following stores have to charge a sales tax on the taxable meals they provide:

Bakeries: 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 baked goods sales are taxable except when sold in units of 6 or more for takeout. However, if the bakery in some way separates the restaurant part of the store from the rest of the store, the bakery part remains a store, and its sales generally are not taxable. In that case, only the restaurant part is considered a restaurant for tax purposes. A separate restaurant part cannot be established if taxable beverages or other meals must or may be purchased from the area, section or counter from which baked goods are sold. Some separation of space and function is necessary.

Delicatessens: A delicatessen is generally considered a store with a restaurant part. Prepared foods including meat, poultry, or fish items—fried chicken or barbecued spareribs for example—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 a bakery, delicatessen, or restaurant part 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 buy salads and pay by weight is a restaurant for the purpose 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 spareribs) heated or in a combination plate is taxable.

Convenience stores: Convenience store sales of the following items are taxable:

• Poured or fountain-type beverages
• Combination plates sold as a unit reasonably and commonly considered a meal, heated or not
• Single-portion entrees such as lasagna, eggplant parmesan or quiche, heated, or refrigerated if the store provides a heating unit, and prepackaged or not
• Heated prepared foods
• Quick meals, such as hot dogs, hamburgers, pizza or soup, heated, or refrigerated if the store provides a heating unit, and prepackaged or not
• Sandwiches, whether or not prepackaged or heated
• Unpackaged snacks such as fresh-popped popcorn

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 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, then all sales are taxable.

Restaurant meal delivery companies: A restaurant meal delivery company is a vendor of meals bought from restaurants for resale and delivery. The restaurant meal delivery company must provide a Sales Tax Resale Certificate (Form ST-4) to all restaurants on all purchases of meals that it resells and delivers to its customers. The company must also register with DOR, collect the 6.25% sales tax (and, where applicable, the 0.75% local option meals excise) on the sales price paid by the retail customer for the meals (excluding separately stated delivery charges and tips) and send the tax to DOR. For purposes of the local option meals excise, the location of the consumer will determine whether and where the local option meals excise will be imposed.

A restaurant that sells meals to a restaurant meal delivery company must accept a Massachusetts Sales Tax Resale Certificate (Form ST-4) from that restaurant meal delivery company. Once the form is accepted, the restaurant doesn't have to collect and send the sales tax on meals to the Commonwealth. See Sales Tax Treatment of Restaurant Meals that are Resold by Restaurant Meal Delivery Companies for more information. 

Please note that businesses facilitating the sale of meals on behalf of restaurants are not subject to the marketplace facilitator rules. Such businesses are not required to collect and remit tax on the sales of meals, as long as the restaurants themselves are registered to collect and remit tax. DOR may issue further guidance relating to the responsibilities of businesses facilitating the sales of meals. Any later change that would apply the marketplace rules to these businesses will be applied by DOR on a prospective basis.

For more information on a store not mentioned here, feel free to reach out to DOR's Contact Center at (617) 887-6367.

Store sales

Sales of food and beverages by the stores listed above are subject to the tax if the items are sold in a way that it could be considered a meal. The following items sold in stores are taxable:

• Beverages: Poured beverages, such as a cup of coffee or a fountain soda.
• Unpackaged baked goods: Unpackaged baked goods or other snacks are generally taxable unless sold in units of 6 or more to be taken out. Baked goods in units of 6 or more include any variety of items totaling 6 or more servings. For example: 2 bagels, 3 muffins and 1 danish; or a whole pie, cake, loaf of bread, etc. However, a bakery may sell any amount of unpackaged baked goods tax-free if it sells only baked goods, or if it keeps its restaurant sales separate as required by DOR regulation.
• Hot foods: Any heated prepared food item.
• Entrees: Single-portion-size entrees (e.g., lasagna, eggplant parmesan or quiche) prepared to be eaten immediately, if heated. Refrigerated items are also taxable if the store provides heating units (typically microwave ovens) customers can heat their entrees with. Such entrees are taxable, prepackaged or not. Frozen entrees are not taxable.
• Combination plates: Prepared foods sold as a unit reasonably and commonly considered a meal, heated or not. Foods that are otherwise not taxable do not become taxable simply because they are purchased together. The sale of a half-pint of potato salad and a half-pint of tuna salad for off-premises consumption is not taxable unless the items are presented or served as a unit in a way that is reasonably and commonly considered a meal, such as sold as a plate or packaged as a dinner for a single price.
• Quick meals: Meals prepared for immediate consumption such as hot dogs, hamburgers, pizza slices or soup (if heated). These are also taxable when refrigerated if the store provides heating units (typically microwave ovens) customers can heat their quick meals with. Frozen quick meals are not taxable. Selling sandwiches is taxable, prepackaged or heated.

Other types of taxable items included in sales price

The sales tax on a meal is generally based on that meal's sale price. In some situations, 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 situations describe where some items are considered taxable:

Service charges included in the sales price of the meal: Generally, separately stated amounts labeled as service charges added to the price of a meal are included in the sales price when such amounts are part of the consideration for food and beverages. However, separately stated amounts labeled as gratuities, service charges or tips aren't included in the sales price of the meal if they are distributed by the vendor to the service employees, wait staff employees or service bartenders. If the service charges are paid in part to the waiters or other service personnel, then the charges are included in the sales price of the meal and subject to the sales tax.

Room rentals for serving meals: If a room is rented for the purpose of serving a meal, and the room's operator provides a meal, the room charge is included in the meal price subject to the tax, 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 vendor records and the customer bill. 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 the following requirements are met:

• A ticket is sold and collected as evidence of the admission charge
• The patron is not required to buy any food or beverages
• The charge is for admission only and doesn't include any payment for food or beverages
• The admission charges are separated from other receipts in the books and records of the place of entertainment

Discounted meals: If a vendor offers customers, upon presenting a coupon, a discount from the usual price of a meal, the tax is only due on the actual amount the vendor charges the customer. So if a restaurant offers a patron 2 meals for the usual price of 1 due to a coupon, the price of the free meal is excluded from the meals tax. See 830 CMR 64H.1.4: Discounts, Coupons and Rebates for more information.

Restaurant sales

Certain food and beverages aren't considered meals when sold by a restaurant for taking out, and those sales are tax-exempt. 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
• A prepackaged pint, quart, half gallon, etc. of ice cream, provided that they are commonly sold in the same manner in a retail food store that is not a restaurant. (Handpacked ice cream, regardless of size, is taxable.)

Store sales

The following items sold in stores are not taxable:

• Beverages: Beverages sold in unopened original containers to be consumed off the premises, whether bought separately or with other foods.
• Prepackaged snacks and prepackaged baked goods: Items such as popcorn, chips, candy, ice cream, prepackaged pastries, novelties, etc. to be eaten off the premises. Prepackaged means packaged in a sealed, unopened original container intended and marked by the manufacturer for individual sale.
• "Party packs" and "party platters": Various meats, poultry or cheeses sold by weight or count, cut and arranged on platter(s), sold with other foods and designed to serve multiple 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, they must pay the use tax on the cost to the nonfood item vendor.

Sales to certain buyers/organizations

Meals sold to the following buyers are not taxable:

501(c)(3) organizations: Meals sold to organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code (certain religious, educational, charitable, or scientific organizations) or to people, organizations or groups buying meals as agents on behalf of such organizations, generally are exempt if the organization uses the meals to conduct its exempt enterprise. To claim the exemption, the buyer and its agent must give the vendor:

• A properly completed copy of a Sales Tax Exempt Purchaser Certificate (Form ST-5), and
• A copy of the exempt organization's Certificate of Exemption (Form ST-2) issued by DOR.

The vendor must ensure that these forms are complete and keep them to prove the sale was exempt. Otherwise, the vendor may have to pay the sales tax on the meal.

Elderly or handicapped persons: Meals sold to an organization of elderly or handicapped people who live in certain subsidized housing are generally tax-exempt if:

• The organization has a Golden Age Meals Tax Exemption Certificate (Form MT-4) from DOR,
• The vendor gets a valid Golden Age Meals Tax Exempt Purchaser Notice (Form MT-5) along with a copy of Form MT-4 from the buyer, and 
• The vendor keeps a record of the sale

To claim the exemption and obtain Forms MT-4 and MT-5, call DOR's Contact Center at (617) 887-6367.

The U.S. or Massachusetts government: Meals sold directly to the U.S. or Massachusetts government, or to people, organizations or groups buying meals as their agents, are exempt. See 830 CMR 64H.6.5 for more information about vendor requirements for selling directly to government organizations or entities. 

Meals sold by organizations

Meals sold by the following organizations are not taxable:

• Health and day care facilities: Sales of meals prepared by employees and served in a hospital, nursing home or licensed residential or daycare facility.
• Hot lunch program for elderly persons: Sales of government-funded meals served through qualifying school lunch programs to the elderly.
• Churches and synagogues: Sales of meals prepared and served on the premises by members of a church or synagogue to its members and guests.
• 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.
• Certain continuing care facilities: Sales of meals to residents of certain continuing care facilities. Continuing care facilities generally are residences that charge an up-front fee for room and board plus nursing or medical services. For more detailed information, see Meals Tax Exemption for Continuing Care Facilities.