wmartin@brl-tgr.ARPA (Will Martin ) (08/30/84)
Does anyone have any knowledge regarding state laws or revenue codes that cover this point? When you buy an item in the grocery store, here in Missouri, you have to pay sales tax on it (foodstuffs are not exempt, as they are in some states). If you have a coupon for some amount off on the item from the manufacturer, it usually says somewhere in the fine print that the consumer is responsible for any taxes due, and the usual way the store handles it is to charge full price for the item, compute the sales tax, and then deduct the coupon amount from the total owed. I don't have any disagreement with this procedure -- you are using the coupon essentially as scrip money in this case. However, when the coupon is issued by the store (or chain) itself, the same procedure is followed. In this case, I disagree with the process, especially in the situation where the store advertises that you are getting something "free". The percentage sales tax on something free is, like any other sales tax computation, based on the cost of the item. Any percentage of "free", or zero, is zero. The store should compute the amount owed by totalling the bill, subtracting the credited amount for the "free" goods, and THEN computing sales tax on the remainder. Is this distinction called out explicitly in any state tax codes or regulations? I called the "Consumer Relations" office of the store chain, and they took my name & number and said they'd get back to me, so I don't have their "official" position on it yet. (By the way, what inspired this query was a deal from Schnuck's markets in St. Louis; they had a promotion in which you had to buy $15 worth of groceries each week for 7 out of 8 weeks and they stamped a form -- at the end you got 10 lb of hamburger or one of a couple other "free meat" deals. This was implemented by giving you a coupon good for $15.80 credit on hamburger, for example -- the current cost of 10 lbs bulk-packed. So we're talking about the stores collecting sales tax on $15.80 from thousands of customers -- a tax which I don't think they are legally obligated to turn over to the state, and which they can keep.) While I'm on the subject, does anyone know how stores which have a large percentage of their sales in tiny amounts, below the minimum level at which sales tax is charged, have to compute their sales tax returns and pay the state? Can they certify that, for example, 30% of their income is from candy sales of 10 cents or less to schoolkids, and therefore 30% of their business income is not subject to sales tax payments to the state? (I realize that this question is not very current; sales tax is now charged on purchases of much lower value than it used to be, and everything costs much more now, so most purchases get caught by the tax tables. This wasn't so back in the 50's, though; can someone respond with historical information that would be appropriate for times when you paid no tax for a purchase under 50 cents or so, and a neighborhood candy store did a lot of business selling a dime soda or 5 cents worth of penny candy?) The eternal nitpicker, Will Martin seismo!brl-bmd!wmartin or wmartin@almsa-1
wmartin@brl-tgr.ARPA (Will Martin ) (08/30/84)
Regarding the attitude of the store chain on the sales tax on a "free" item: They called me back and are giving me back the sales tax I paid. Unfortunately, their automated checkout system is set up to make deducting the coupon amount before computing sales tax impossible or difficult (sound familiar?), so everybody else who doesn't complain still pays it. Their representative was either just being polite or really agreed with my distinction between store-issued and manufacturers' coupons. Will Martin
dave@utcsrgv.UUCP (Dave Sherman) (09/02/84)
The legal determination of whether sales tax will have to be paid on a
free item may depend on the wording of the legislation implementing
the sales tax. In Ontario, the Retail Sales Tax Act specifies that tax
is to be paid on the "consumption or use" of goods. The purchase is
simply a convenient place to collect it. If your state legislation
uses similar language, you would have to look at the wording of the
provision which defines the basis on which the tax is calculated.
It may be arguable that you should pay tax on the value of what you
are receiving rather than on the price you are paying.
Dave Sherman
The Law Society of Upper Canada
Toronto
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{ allegra cornell decvax ihnp4 linus utzoo }!utcsrgv!dave2141smh@aluxe.UUCP (henning) (09/03/84)
**** **** From the keys of Steve Henning, AT&T Bell Labs, Reading, PA aluxe!2141smh The distinction is not whether the coupon is a manufacturer's or store coupon but whether the coupon is: 1) WORTH X DOLLARS TOWARD THE PURCHASE OF SAID ITEM or 2) ENTITLES YOU TO A FREE ITEM OR A DISCOUNT ON A ITEM. In the first case the coupon is used as money and is taxed as such. In the second case the coupon changes the price and is not taxable.
essachs@ihuxl.UUCP (Ed Sachs) (09/04/84)
================================================================= Here in Illinois, you pay sales tax on manufacturers' cents off coupons, but not on the retailers' coupons. The retailers' coupons are considered a reduction in the purchase price, and the sales tax is charged on the actual purchase price. Regarding sales below the minimum in the tables (are there any these days -- what can you buy for a dime?) in most states that I'm familiar with (including New York and Illinois), the retailer's tax obligation is computed as a percentage of gross sales, and the actual tax collected is irrelevent, or, sometimes, the retailer must remit the larger of the two amounts. Thus, the guy who sells 10 cent items to school children loses. -- Ed Sachs AT&T Bell Laboratories Naperville, IL ihnp4!ihuxl!essachs