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发帖数: 923 | 1 Coupons Shouldn't Be Taxed, but Government Vouchers Should
http://taxfoundation.org/blog/coupons-shouldnt-be-taxed-governm
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July 09, 2008
By Josh Barro
Recently, Best Buy sent checks for a few dollars to customers in
Pennsylvania, Texas and Wisconsin. The checks are refunds for sales tax
charged on the portion of their digital television converter boxes they paid
for with federal government vouchers.* Those states' departments of
revenue have ruled that the $40 voucher should be exempt from tax. As The
Consumerist reports, one typical Texas customer received a letter of apology
and a check for $3.30.
How did Best Buy, a huge national retailer, get confused about how it was
supposed to tax these purchases? Well, there are over 7,400 sales tax-
levying jurisdictions in the United States, and the differences between
their rules about coupons can be confusing, even for a company with scores
of lawyers.
Coupons and Sales Tax
The key area of confusion is that most states treat manufacturers' coupons
differently from retailers' coupons.
If the retailer issues a coupon and expects no reimbursement from any other
party (i.e., a retailer coupon), that is treated like a true reduction in
price; first, the coupon is applied, then sales tax is calculated on the
final sale price.
Method #1:
$40.00 original price
($10.00) retailer's coupon
$30.00 subtotal
$ 1.50 5% sales tax
$31.50 tax-inclusive price
However, if the retailer expects reimbursement from the manufacturer or
another third party (as is typical with manufacturers' coupons) tax is
charged on the price before application of the coupon.
Method #2:
$40.00 original price
$ 2.00 5% sales tax
$42.00 subtotal
($10.00) manufacturer's coupon
$32.00 tax-inclusive price
The above is the rule in a preponderance of states, including (for example)
California, Minnesota, Mississippi, New Jersey, New York, Ohio and Tennessee.
Other states treat all coupons as discounts, regardless if they will be
reimbursed by the manufacturer. In other words, "Method #1" above applies
to all coupons. States using this rule include Connecticut, Massachusetts,
Pennsylvania and Texas.
Since Pennsylvania and Texas are both states where manufacturer's coupons
are not taxable, it's somewhat surprising that Best Buy used "Method #2" in
those states. Our guess is that Best Buy viewed the vouchers not as coupons
but as gift cards. Gift card purchases are ordinarily taxable.
So, How Should Coupons Be Taxed?
Our guiding principles for sound tax policy include simplicity and
neutrality. To make sales tax simple and neutral, a state should treat all
coupons equally. Here's our thinking:
Simplicity. Complicated rules on coupon purchases are burdensome to
retailers, especially smaller ones or those that operate without modern
Point-of-Sale equipment. Here, for example, are instructions from the New
York State Department of Taxation on Finance on processing purchases that
involve manufacturer's coupons, retailer's coupons, food stamps, and cash:
When a customer uses food stamps, cash, and coupons to purchase food and
beverages, you: first, apply any store coupon to reduce the purchase price
of the item to which the store coupon relates; second, apply any
manufacturer's coupon to the purchase price of the item to which it relates;
where the item is taxable, collect tax on the value of the manufacturer's
coupon (that is, for example, a coupon encoded with mfg.); third, apply the
food stamps to the remaining purchase price of any taxable, eligible items
and then to the remaining purchase price of any exempt eligible items; and
fourth, if the customer does not have enough food stamps to cover the entire
bill, collect the tax on any remaining balance due on taxable items paid
for with cash (or credit card).
Uniform tax treatment of coupons would be simpler and would reduce
compliance costs.
Neutrality. A neutral sales tax system should tax all consumption exactly
once, at the same rate. The amount of consumption is determined by the
consumer price of goods purchased. Therefore, a neutral sales tax should
deduct coupon amounts before calculating tax, so that discounts by coupon
are treated uniformly with discounts by other methods. Furthermore, a
neutral sales tax should make no distinction between manufacturer's coupons
and retailer's coupons: they both reduce the final price paid for the good,
and whether that reduction is borne by the retailer or the manufacturer is
not relevant in determining the amount of consumption.
What About Those DTV Converter Vouchers?
The Pennsylvania, Texas and Wisconsin departments of revenue have ruled, and
these "coupons" aren't taxable in those states. However, we actually think
Best Buy's instinct was right: unlike true coupons, the DTV vouchers really
are gift cards, and so they should be taxed.
The government voucher doesn't represent a price reduction. All it does is
shift part of the purchase cost from the consumer to the government, and so
the amount of consumption is still properly viewed as the full price. When
taxpayers received their stimulus checks earlier this year, they had to pay
sales tax on whatever they bought with them. The fact that the DTV vouchers
are earmarked for a specific purpose shouldn't make them different.
We covered another sales tax overcharge here. Read more about compliance
costs & tax complexity and sales & use taxes.
*Psst: you're entitled to two vouchers, worth $80! Apply here to get some
of your tax dollars back in highly restricted form! |
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