Massachusetts Fast Food Restaurant Not Liable for Use Tax on Meal Toys.

A fast food restaurant was not liable for Massachusetts use tax on purchases of toys for its children’s meals because the restaurant did not use the toys for promotional purposes, but rather sold the toys as a component of the meals that included them. The evidence concerning the planning and marketing of the toys supported the taxpayer’s claim that the value and desirability of the meals were significantly affected by the inclusion of the toys. The taxpayer argued that the toy was an essential part of the meal and not simply an incentive to purchase food. Therefore, the toys were not give-away items subject to use tax but rather sold in conjunction with the entire meal package. (McDonald’s Restaurants of Massachusetts, Inc. v. Commissioner of Revenue, Massachusetts Appellate Tax Board, No. C262528, April 22, 2005)

Posted on December 6, 2005