The Massachusetts Department of Revenue has provided guidance on the tax treatment of promotional vouchers sold by companies such as Groupon and LivingSocial. For purposes of the department’s directive, a “qualifying promotional voucher” must clearly state the face value and the amount paid by the customer and must remain valid for redemption for at least the amount paid by the customer indefinitely. A sale of a voucher is not subject to tax at the time of sale but becomes subject to tax when the voucher is redeemed. Upon being redeemed, a qualifying voucher is treated like a retailer’s coupon. The sales price subject to tax is the amount paid by the customer for the voucher plus any additional consideration paid by the customer to the vendor such as for additional items or an upcharge above the voucher. The difference between the promotional value of the voucher and the amount the customer paid for the voucher is excluded from the taxable sales price as a cash discount. Non-qualifying promotional vouchers, including those that do not state the amount paid by the customer, are not treated as retailer’s coupons. For non-qualifying promotional vouchers, no reduction should be made to the taxable sales price. (Directive 12-4, Massachusetts Department of Revenue, July 16, 2012)