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A tech item was on sale at a local Costco for $50 down from $60 so I bought a couple of of them. I noticed they correctly charged me $100 but added tax as if I paid $120.

So I inquired as to wtf.


They said it's Kansas State Law that tax be charged on the original pre-sale amount. So, wait wut!? So if a $1000 item is on sale for $500, then you end up paying tax on a cool grand?!? That would not be chump change. Two managers confirmed this, this doesn't make any sense to me, do other states do this?


EDIT:c627627 said:   Yes, the receipt did state that the amount off was a Manufacturer Coupon. These were ringing up that way even though no coupon was being submitted.


I believe other posters explained the thread topic, if some kind of an instant rebate, instant coupon or similar is being applied - then you get taxed on the pre-"instant discount" amount. The only question is, how many states charge tax on higher pre "instant discount" prices?

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The same topic is being discussed on ocforums and that $500 hypothetical scenario is true, they found this on Costco's w... (more)

c627627 (Mar. 01, 2012 @ 10:04a) |

A mom and pop B&M retailer only has to worry about one county in one state.

Even WalMart can apply one unified policy per... (more)

svr411 (Mar. 01, 2012 @ 6:40p) |

Yep, GrannysQuilting.com will surely be overwhelmed and driven out of business by MegaQuilts, a division of WalTargMart!... (more)

jumi (Mar. 04, 2012 @ 11:14a) |

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If it is an "instant rebate" it may be the case that they have to do this.

Well, they don't have to, but they have to remit the sales tax for the full price to the state, because the manufacturer is paying part of the price (the rebate).

The "sale" is treated as a manufacturer's coupon, which is deducted after tax in most states.

c627627 said:   A tech item was on sale at a local Costco for $50 down from $60 so I bought a couple of of them. I noticed they correctly charged me $100 but added tax as if I paid $120.

So I inquired as to wtf.


They said it's Kansas State Law that tax be charged on the original pre-sale amount. So, wait wut!? So if a $1000 item is on sale for $500, then you end up paying tax on a cool grand?!? That would not be chump change. Two managers confirmed this, this doesn't make any sense to me, do other states do this?


I do some couponing as a hobby and it's actually kind of interesting as to how each state treats it. I was in Kansas City (Mo) over the holidays and had ventured into Kansas to make some of the "free after coupon" purchases that I was making and I was shocked to realize that Kansas is a pre-coupon tax state (Missouri is post coupon -- so if your 1 dollar item has a 1 dollar coupon, you pay zero, but in kansas you'd pay like 9 cents, since Kansas has infinite sales tax as well).

I believe that Kansas is set up such that they have to charge tax on the value that is being reimbursed from a third party -- but you may have to check the state regs themselves -- but essentially, if the store's decrease in price is from something that is being paid to the store from some other place, then the customer has to pay the tax on that amount.


EDIT: so if you are close to the border, and using some kind of large coupon, you should go to Missouri to do it

corporateclaw said:   c627627 said:   A tech item was on sale at a local Costco for $50 down from $60 so I bought a couple of of them. I noticed they correctly charged me $100 but added tax as if I paid $120.

So I inquired as to wtf.


They said it's Kansas State Law that tax be charged on the original pre-sale amount. So, wait wut!? So if a $1000 item is on sale for $500, then you end up paying tax on a cool grand?!? That would not be chump change. Two managers confirmed this, this doesn't make any sense to me, do other states do this?


I do some couponing as a hobby and it's actually kind of interesting as to how each state treats it. I was in Kansas City (Mo) over the holidays and had ventured into Kansas to make some of the "free after coupon" purchases that I was making and I was shocked to realize that Kansas is a pre-coupon tax state (Missouri is post coupon -- so if your 1 dollar item has a 1 dollar coupon, you pay zero, but in kansas you'd pay like 9 cents, since Kansas has infinite sales tax as well).

I believe that Kansas is set up such that they have to charge tax on the value that is being reimbursed from a third party -- but you may have to check the state regs themselves -- but essentially, if the store's decrease in price is from something that is being paid to the store from some other place, then the customer has to pay the tax on that amount.


EDIT: so if you are close to the border, and using some kind of large coupon, you should go to Missouri to do it

corporateclaw: If by coupon, you mean a manufacturer's coupon, I would say most states apply the coupon post-tax (the way Kansas does). Missouri might actually be an exception.

However, OP mentioned "on sale". This usually means the sale price of the item has been (temporarily) reduced from $60 to $50. If so, it is strange to be taxed on $60 instead of $50 (the actual sale price). However, OP needs to clarify if it indeed was a "sale" or a manufacturer coupon/rebate that costco often automatically applies to reduce the price from $60 to $50.

uutxs said:   corporateclaw said:   c627627 said:   A tech item was on sale at a local Costco for $50 down from $60 so I bought a couple of of them. I noticed they correctly charged me $100 but added tax as if I paid $120.

So I inquired as to wtf.


They said it's Kansas State Law that tax be charged on the original pre-sale amount. So, wait wut!? So if a $1000 item is on sale for $500, then you end up paying tax on a cool grand?!? That would not be chump change. Two managers confirmed this, this doesn't make any sense to me, do other states do this?


I do some couponing as a hobby and it's actually kind of interesting as to how each state treats it. I was in Kansas City (Mo) over the holidays and had ventured into Kansas to make some of the "free after coupon" purchases that I was making and I was shocked to realize that Kansas is a pre-coupon tax state (Missouri is post coupon -- so if your 1 dollar item has a 1 dollar coupon, you pay zero, but in kansas you'd pay like 9 cents, since Kansas has infinite sales tax as well).

I believe that Kansas is set up such that they have to charge tax on the value that is being reimbursed from a third party -- but you may have to check the state regs themselves -- but essentially, if the store's decrease in price is from something that is being paid to the store from some other place, then the customer has to pay the tax on that amount.


EDIT: so if you are close to the border, and using some kind of large coupon, you should go to Missouri to do it

corporateclaw: If by coupon, you mean a manufacturer's coupon, I would say most states apply the coupon post-tax (the way Kansas does). Missouri might actually be an exception.

However, OP mentioned "on sale". This usually means the sale price of the item has been (temporarily) reduced from $60 to $50. If so, it is strange to be taxed on $60 instead of $50 (the actual sale price). However, OP needs to clarify if it indeed was a "sale" or a manufacturer coupon/rebate that costco often automatically applies to reduce the price from $60 to $50.


I found this: http://kansasstatutes.lesterama.org/Chapter_79/Article_36/

Here is the part that seems relevant:
(2) "Sales or selling price" includes consideration received by the seller from third parties if:

(A) The seller actually receives consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale;

(B) the seller has an obligation to pass the price reduction or discount through to the purchaser;

(C) the amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser; and

(D) one of the following criteria is met:

(i) The purchaser presents a coupon, certificate or other documentation to the seller to claim a price reduction or discount where the coupon, certificate or documentation is authorized, distributed or granted by a third party with the understanding that the third party will reimburse any seller to whom the coupon, certificate or documentation is presented;

(ii) the purchaser identifies to the seller that the purchaser is a member of a group or organization entitled to a price reduction or discount. A preferred customer card that is available to any patron does not constitute membership in such a group; or

(iii) the price reduction or discount is identified as a third party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate or other documentation presented by the purchaser.


I know sometimes sales to get rid of some stock is done in a way that the price is reduced by X and the manufacturer is reimbursing that X amount to the seller. In that case, perhaps D(ii) becomes relevant for Costco members, since it is a paid membership and not simply a regular "preferred customer card."

I think it is more likely that it was one of those costco "instant rebates" though, and simply implicates D(iii) of the code.




And, yes, missouri is awesome, if that is what you are saying

Almost anything I have purchased in PA has been taxed on the final amount paid, after instant rebates and coupons.

Yes, the receipt did state that the amount off was a Manufacturer Coupon. These were ringing up that way even though no coupon was being submitted.


I believe other posters explained the thread topic, if some kind of an instant rebate, instant coupon or similar is being applied - then you get taxed on the pre-"instant discount" amount. The only question is, how many states charge tax on higher pre "instant discount" prices?

c627627 said:   Yes, the receipt did state that the amount off was a Manufacturer Coupon. These were ringing up that way even though no coupon was being submitted.


I believe other posters explained the thread topic, if some kind of an instant rebate, instant coupon or similar is being applied - then you get taxed on the pre-"instant discount" amount. The only question is, how many states charge tax on higher pre "instant discount" prices?


Most.

I routinely have 0 balance and have to pay tax @CVS

are there any cities in PHX that don't charge coupon tax... I know Sun Cities don't charge food taxes and lower % in general...

Yet some politicians want all online businesses to comply with sales tax laws nationwide. Talk about a nightmare of red tape and bureaucracy.

NJ charges tax base on pre-sale amount also.

svr411 said:   Yet some politicians want all online businesses to comply with sales tax laws nationwide. Talk about a nightmare of red tape and bureaucracy.Not that bad. There are companies that will calculate the sales tax for them. I'm not sure about the collection/remittance piece but clearly some companies are doing it already. Some (like Wirely and Buy.com) do it incorrectly in NY, they do not charge the local rate properly.

And yes, Costco does charge tax on the pre-coupon amount. It was especially annoying when I got a cell phone that was $99 less $99 coupon and I had to pay $8 in sales tax. I don't believe that other phone retailers would charge sales tax on the discounted amount.

dealmaster00 said:   Almost anything I have purchased in PA has been taxed on the final amount paid, after instant rebates and coupons.

Same with me. I had one problem recently with tax on a pre-sale price, at Home Depot, and a manager came and corrected the total.

billrubin said:   

And yes, Costco does charge tax on the pre-coupon amount. It was especially annoying when I got a cell phone that was $99 less $99 coupon and I had to pay $8 in sales tax. I don't believe that other phone retailers would charge sales tax on the discounted amount.


Cell phones are special. If the amount of the discount is being reimbursed (subsidized phone essentially), many states charge tax on the amount before the subsidy. Not all states do, but this is a rather notable example because the amount of the subsidy is enormous for many fancy phones.

The rules I have seen here is if it is a store coupon (store funded coupon or sale), then the tax is after the store price. If it is a manufacturer funded item (instant coupons, in-ad coupons, 'rebate' money), then tax is applied before these coupons. I have seen many, many store coupons now coded as manufacturer coded (which is likely the truth), but before the store would act as if they were giving the discount (which is not the case).

Rasheed

rasheedb said:   Cell phones are special. If the amount of the discount is being reimbursed (subsidized phone essentially), many states charge tax on the amount before the subsidy. Not all states do, but this is a rather notable example because the amount of the subsidy is enormous for many fancy phones.
I know that California does this. My state does not but CVS still charged me the sales tax.
The rules I have seen here is if it is a store coupon (store funded coupon or sale), then the tax is after the store price. If it is a manufacturer funded item (instant coupons, in-ad coupons, 'rebate' money), then tax is applied before these coupons. I have seen many, many store coupons now coded as manufacturer coded (which is likely the truth), but before the store would act as if they were giving the discount (which is not the case).
CVS, in particular.

WA requires Tax applied to item before coupon, On another note, when you buy a used car DOL determines the taxable amount and doesn't except that you got a good deal. To get a lesser amount considered you sign a swaorn statement and are subject to inspection of your vehicle for them to determine value.

costco in ca also charge sales tax on instant coupons against ca law.

u2head8 said:   NJ charges tax base on pre-sale amount also.
NJ sucks, probably the worst state in US.

chaddi said:   NJ sucks, probably the worst state in US.

Worst is going a bit far, but at least they owe us an apology for Snooki.

svr411 said:   Yet some politicians want all online businesses to comply with sales tax laws nationwide. Talk about a nightmare of red tape and bureaucracy.I'm sure it is, but there are B&M retailers that have systems to manage it now. I'm not sure if any non [fast food] restaurants are in all 50 states, but retailers like WalMart, CVS, etc. certainly have most states covered, as do many of the mall department stores. Even among things like fast food restaurants, they have to deal with is prepared food taxable, is there different treatment between take out and dine in, etc.

The same topic is being discussed on ocforums and that $500 hypothetical scenario is true, they found this on Costco's web site in fine print:

Valid for orders placed February 17, 2012 through March 10, 2012. While supplies last.

Online price $2,999.99
**Less -$500.00
YOUR COST $2,499.99

**The $500 manufacturerís discount will automatically be deducted at checkout. State law may require sales tax to be charged on the pre-discounted price...

cclyde said:   I'm sure it is, but there are B&M retailers that have systems to manage it now. I'm not sure if any non [fast food] restaurants are in all 50 states, but retailers like WalMart, CVS, etc. certainly have most states covered, as do many of the mall department stores. Even among things like fast food restaurants, they have to deal with is prepared food taxable, is there different treatment between take out and dine in, etc.

A mom and pop B&M retailer only has to worry about one county in one state.

Even WalMart can apply one unified policy per store.

Small business startups have no chance of complying with each tax law, each different rate, each list of taxable goods, and each list of tax holidays for each county of each state.

It is a massive red tape nightmare which will force many small businesses to close up shop and many others to sink gobs of money into paying useless paper pushers to implement a compliance solution.

The big retailers love it, because they know that granny's quilting business would sooner shut down than compete.

svr411 said:   cclyde said:   I'm sure it is, but there are B&M retailers that have systems to manage it now. I'm not sure if any non [fast food] restaurants are in all 50 states, but retailers like WalMart, CVS, etc. certainly have most states covered, as do many of the mall department stores. Even among things like fast food restaurants, they have to deal with is prepared food taxable, is there different treatment between take out and dine in, etc.

A mom and pop B&M retailer only has to worry about one county in one state.

Even WalMart can apply one unified policy per store.

Small business startups have no chance of complying with each tax law, each different rate, each list of taxable goods, and each list of tax holidays for each county of each state.

It is a massive red tape nightmare which will force many small businesses to close up shop and many others to sink gobs of money into paying useless paper pushers to implement a compliance solution.

The big retailers love it, because they know that granny's quilting business would sooner shut down than compete.


Yep, GrannysQuilting.com will surely be overwhelmed and driven out of business by MegaQuilts, a division of WalTargMart! LOL!

It is far more likely that Granny would get an exemption if actually small (most proposals I've seen call for that, w/kick-ins from $100-$500-k in annual online sales). If Granny is actually big, I'm sure there will be software add-ons for her webstore that will be available -- it is not as if Granny herself needs to be a national tax expert -- anymore than she needs to know CSS, HTML, etc. to have an on-line business.



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