TV NEWS PANS STOP & SHOP'S INTERPRETATION OF TAX LAW

QUINCY, Mass. -- Stop & Shop Cos. here got caught late last month in a negative publicity wringer when differences between its tax policies and those of its competitors came to light in a TV news report. it to charge less tax on frequent-shopper card items.However, because other retailers in its operating area are interpreting the law differently, some are already charging the lower rates -- a situation

QUINCY, Mass. -- Stop & Shop Cos. here got caught late last month in a negative publicity wringer when differences between its tax policies and those of its competitors came to light in a TV news report.

it to charge less tax on frequent-shopper card items.

However, because other retailers in its operating area are interpreting the law differently, some are already charging the lower rates -- a situation that led to negative local publicity for Stop & Shop, a division of Ahold, Zaandam, Netherlands.

According to Phillipes, Massachusetts tax law 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 are apparently charging tax on the net, whether they are reimbursed for part of the cost or not, Phillipes told SN, Stop & Shop filed May 15 for a review of the law "to get an interpretation consistent with what's being practiced.

"All we're trying to do is get a tax ruling that's more consumer-friendly," Phillipes said.