Sales tax on coupon discounted purchases

[Bmi48219]

Can anyone explain why, when you use a $ XX.00 off coupon, the retailer rings the purchase up at full price, adds the sales tax and then subtracts the coupon discount?
It seems to me the state (Florida in this instance) sales tax should only apply to the actual purchase funds. I've never been able to figure this one out.
How does a retailer pay the taxes to the state? Is it based on gross $$ received or what the actually collected in sales tax?
Taxes in general really irritate me.

[Cowboy_Dan]

It depends on your state. What is likely happeninv there is the store is still required to collect tax (from the consumer) based on the the funds they will recieve in reinbursment from the ciupon issuer. In Indiana it's a bit of a mess. Depending on the coupon, it is either an offer from the manufacturer or a form of tender. The former are untaxed while the latter are.

[reddog81]

Not only does it depend on the state it also depends on the type of coupon. If it's a manufactures coupon the retailer recognizes the full sales prices for sales tax purposes.
For example if you present a $2 off manufacturer coupon on a $5 dollar sale the retailer collects $3 from you and $2 from the manufacturer. In this case sales tax is due on $5. The retailer could eat the expense on the $2 manufacture coupon but generally they just charge the customer the difference
if the coupon is a store coupon then the store only collects money from the customer. For example a $2 off store coupon on a $5 sales results I the store only collecting $3. The tax base in this example would be $3

[rockrat]

Could be makes for more profit for the store too!! Charge sales tax then keep the extra that would have been saved on the discount.

I did shop in a store once that ran the coupon thru before totaling the goods purchased and applying tax.

[Mal Paso]

How are you supposed to raise kids honest when the government is the biggest cheat of all?

reddog81 You could also say the manufacturer is selling the product for $3 and the rest is creative bookkeeping. Good post though!

[garym1a2]

Food items are not taxed in Florida, nor is out of state internet items except for Amazon

[starmac]

Except for Amazon, what is up with that.

We do not have sales tax, it is sure nice paying the marked or advertised price for any item. lol

[shoot-n-lead]

Except for Amazon, what is up with that.

We do not have sales tax, it is sure nice paying the marked or advertised price for any item. lol

I am sure it helps, since y'all pay considerably more for items, than those of us in the lower 48.

[MT Gianni]

Another ? I have wondered about you States that have a sales tax. Some approach 8% or more. When you tip on a restaurant or bar bill do you tip on the service as the shop wants or do you deduct the tax then tip?

[reddog81]

Amazon has to charge tax like any other company that has a presence in FL. If a company doesn't have any physical connection to a state they don't have to collect the tax. Technically the the purchaser still owes the tax and is supposed to remit the tax directly to the state.

MT Ganni, typically people tip in addition to the tax amount. On a $10 meal I would pay $.60 in tax and tip 15% of $10, or just an even $12.

[MT Gianni]

That is what I have done as well. It only comes in to mind when you have a party of four and the bill is $100.00 +.

[Bmi48219]

In the instance I mentioned I used a store issued coupon to purchase a couple items at Bass Pro. Their prices are typically 20 to 25 % higher than average for these items. They issued the coupon know it would knock their margin down. Since they aren't getting reimbursed by manufacturers for the discount I don't think they should charge tax on the discount. Going to see if the Florida Attorney General's office will answer the question.

[kenyerian]

I would guess that all of the big chains are following the different Tax codes exactly to the letter as the Government wants all of the revenue they can get. Any high Volume retailer is going to be scrutinized carefully to Maximize tax revenue. A small business might get away with something but even that is getting harder to do in this computer driven world.

[reddog81]

It's possible the retailer has something setup incorrectly on their point of sale software. I've helped setup tax tables before and the myriad of different taxing jurisdictions and rules is amazingly complex.
I'd contact the retailer first. The attorney generals office isn't going to have any idea why a retailer is doing something.
The probelm could literally be one specific coupon code or one type of coupon. There are many types of coupons and discounts out there.

[smokeywolf]

The States pass legislation that requires businesses to charge sales tax on the stickered, posted or scanned price of the taxable item. Not on the actual amount of money that changes hands.

Politicians raise taxes following the same theory as dropping a frog in a pot of water and slowly raising the temperature until he boils to death.

There are quite a few scams used to raise taxes without you being the wiser.

0-bammyCare is one of them. The indigent have been getting free medical care for decades by going to the local County hospital emergency room, where they get treated whether they have money or not. Taxes reimburse the hospital for the expense.
With 0-bammyCare, the bloated insurance premiums and deductibles now pay those medical bills, but the gov't still takes the same taxes from you.

About 10 years ago, L.A. mayor Tony Ragosa announced that garbage collection rates would be going up some from around $11.00/month to $26.00/month. $11.00/mo seems pretty cheap until you find out that trash collection is part of the Los Angeles Dept. of Water & Power (LA DWP). The cost to collect trash is more than $11.00 per month, so the remainder is paid for by taxes collected by the city. So, city residents are actually paying the entire cost of trash collection.

During a city budget meeting...


"Villaraigosa.... .... saying he was weighing whether to charge homeowners the full cost of sanitation pickup.
The city's elected officials have long argued that it should not subsidize the cost of trash pickup for homeowners and renters...."


When Ragosa announced the increase, he worded it in way that suggested that, (paraphrasing) "Since the city has for years been subsidizing your trash bill and the city budget is in the red, it's time for Los Angeles residents to start paying more of their share of the trash pickup expenses." This implies that the city money that has for years been paying for part of the trash collection costs hasn't come from the residents.

News media never brought up that this was just another backhanded way of raising taxes without calling it a tax increase.

When the IRS eliminates one of your deductions they are increasing your "effective tax payable" without increasing your "tax rate".

When I was a kid, I remember my father stating that the gov't had a goal of taxing you 5 times on every dollar you earned. I thought he was just complaining and exaggerating. I think they're up to 6 or 7 times now.

[Geezer in NH]

What is a sales tax?

[AK Caster]

What is a sales tax?

You honestly cant be that ignorant.

[dragon813gt]

You honestly cant be that ignorant.

He lives in New Hampshire. They don't have a sales tax. It was a poke at the states that have one. I'm sure he's been to Vermont which has one.

As far as internet purchases go. You are "required" to claim them when you file your tax return. Of course it's the honor system. Amazon used to be great. But PA pushed hard and anyone that has a physical presence in the state must collect sales tax. So this killed the Amazon discount. Their prices have come up a lot but they are really convenient.

[MT Gianni]

Add Montana and Oregon to that list. IIRC, there is another State with out a sales tax as well. Delaware hasn't been mentioned but AK has.

[Geezer in NH]

You honestly cant be that ignorant.

Live free or die

[smokeywolf]

Have a friend who lives in Battleground, WA. No income tax in WA and he drives across the border to Oregon when he does major shopping so he doesn't have to pay sales tax.

[FISH4BUGS]

What is a sales tax?
Yup...no sales tax here! No state income tax either!
Eat your hearts out folks.
Live free or die!

[AK Caster]

Pretty much everyone pays their fair share of state taxes. It is often disguised as other fees. A close friend of mine lives in Tennessee and he pays $900 a year in real estate taxes on property/house appraised at just over $500,000. No state income tax either. But the sales tax is high. At least with sales tax you know exactly what you owe every time you have to pay it.

There are a lot of things to take into consideration before you determine the cost of living. Housing cost, fuel, real estate taxes, other taxes, utilities, etc. The list goes on and on.

[shaune509]

Try the convaluted sales tax in Washington state, if I sell a phone ordered instate sale I have to charge the tax rate of the shipped address [state + local] and file the report of such on the tax forms. And the state does not pay me for the bookeeping along with a 15% 1 day late fee.
Buy a used titled item like a car or boat, get a great deal below book and when you transfer the title the state taxes you at there 'value rate' not what you paid, and most of there rates have a minimum value like @ $1000 or some thing.
Shaune509

[Duckiller]

California charges sales tax on bottle and can deposits,but doesn't return the money when I return the bottles or cans. State legislatures should be allowed to meet for no more than 15 days a year. Only way to control govt!