QUINCY, Mass. -- Stop & Shop Cos. here said it will begin collecting 5% sales tax on the net price rather than the gross price of certain nonedible products, following a ruling by the Massachusetts Revenue Department.
unted sale price.
A chain spokeswoman told SN last week, "We had a different interpretation of the law, and we felt we were in compliance and that we were charging tax correctly."
After local media reported that other chains were charging tax on the sale price, Stop & Shop asked the state for a ruling.
"We are delighted that the Revenue Department has issued this favorable ruling, which will benefit our customers and which clarifies the sales tax regulations affecting our business," Bill Grize, president and chief operating officer, said following the ruling. "We will implement these changes immediately."
The spokeswoman told SN the company will refund any overcharges to customers who have saved their register receipts. "However, the refunds will amount only to pennies," she said.
Before the ruling was issued, Peter M. Phillipes, the chain's executive vice president for administration, and general counsel, told SN Massachusetts tax law on coupons states that if a retailer offering a store coupon is partially reimbursed by a manufacturer, then the retailer must charge tax on the gross amount, while coupons for items supported totally by the retailer require the retailer to charge tax on the net amount.
"When we adopted a frequent-shopper program, eminent tax counsel advised us to follow the same procedures as we did with coupons," Phillipes said.
However, because other chains were charging tax on the net, regardless of whether they were reimbursed for part of the cost, Phillipes said, Stop & Shop asked the Revenue Department May 15 for a review of the law "to get an interpretation consistent with what's being practiced."
