Question on taxes when purchasing BDs...

[BLURAYSONYES]

Lets say I purchased a BD at my local Target for $39.99 but I got a coupon for lets say... $30 off. That brings the movie down to $10 but I get charged of $3.50 in taxes (8.75% in CA). Is this normal when they apply the taxes before the coupon? After the discount I would assume I would only pay $10.87 and not $13.50. Im confused.

[threefiftyrocket]

most coupons actually state that "customer responsible for sales tax" so yes its pretty normal.

[SrLoin]

Tax are applied after the price is reduced from the coupon.

[BLURAYSONYES]

Originally Posted by threefiftyrocket

most coupons actually state that "customer responsible for sales tax" so yes its pretty normal.

so is that responsible before or after discount though? I can clearly see that on the new $10 off coupon for the Princess Frog movie but it doesnt say before or after.

[My_Two_Cents]

Originally Posted by SrLoin

Tax are applied after the price is reduced from the coupon.

Incorrect. Taxes are based on the original sales price of an item. Always has.

Edit: It's this way in KY, but may vary by state.

[Rizor]

From my experience, Target generally takes the coupon after applying the tax.

[fatediesel]

Originally Posted by Ricshoe

Incorrect. Taxes are based on the original sales price of an item. Always has.

It may vary by state, but in Iowa it definitely isn't this way. Tax is based on the price you actually pay. I used to work at Sears and if someone was buying a $15 item and had a coupon for $5 off they were taxed on the $10 that is actually paid.

[My_Two_Cents]

Originally Posted by fatediesel

It may vary by state, but in Iowa it definitely isn't this way. Tax is based on the price you actually pay. I used to work at Sears and if someone was buying a $15 item and had a coupon for $5 off they were taxed on the $10 that is actually paid.

Good point, as I didn't consider it being different by state.

[fatediesel]

It actually would make sense that it would vary by state since sales taxes are purely a state thing.

One thing that could also affect how it works is when the vendor's system applies the coupon. It could automatically apply the coupon at the end of the sale, so if you had say a $40 item and 7% tax it would show the total as $40, the tax as $2.80, and a total of $42.80, and then apply the coupon for $30 off, making the total $12.80.

[yobi111]

In Georgia you pay tax on the original price. The coupon is then deducted from that.

[Snake Plissken]

It generally ends up being a YMMV situation. I have had it both ways.

[smithda]

I think a lot of it also has to do with what type of coupon. If it's a manufactures coupon then the manufacture is going to "pay" the store the amount the coupon is good for, therefore money is still collected and is likely taxed. If it's a store coupon or discount it might be handled differently because ultimately no money will be collected for that deducted amount (similar if you are buying something on sale, you pay taxes on the sale price, not the original price). Just my thought.

[dvdirv]

Originally Posted by smithda

I think a lot of it also has to do with what type of coupon. If it's a manufactures coupon then the manufacture is going to "pay" the store the amount the coupon is good for, therefore money is still collected and is likely taxed. If it's a store coupon or discount it might be handled differently because ultimately no money will be collected for that deducted amount (similar if you are buying something on sale, you pay taxes on the sale price, not the original price). Just my thought.

I think you are correct. When using a manufacturer's coupon (like Disney), then the tax is computed and then the coupon is applied after reaching the total.

When using a store coupon, the discount is applied before the tax is computed.

[quetzalcoatl]

Cannot remember where I found this but I had saved it since I think it gives a good explanation of why this happens.



When these [manufacturers'] coupons are used, sales tax is charged on the full regular price because that is the amount which the vendor ultimately receives — in part from the customer, the balance from the manufacturer.” The same site explained that sales tax should not be charged for vendor coupons because the vendor never receives that extra money.

[MikeDaWiz]

I know the Best Buy Here in Corpus Applies the tax after the discount.

[mikejet]

Yes, look at cell phones, it's much worse. You pay about $20 in tax for a "free" phone.

[DetroitSportsFan]

Originally Posted by fatediesel

It may vary by state, but in Iowa it definitely isn't this way. Tax is based on the price you actually pay.

Same here in Michigan.

[Jwilly019]

Originally Posted by DetroitSportsFan

Same here in Michigan.

Not necessarily. I remember during the $5 off coupon sale at Target I was charged tax on the original cost.

Though thinking back on it now, I can't remember if I was charged tax when using the Target coupon or the manufacturer's coupon. It was for one of the two though, that much I am sure of.

Justin

Edit: I believe I was charged tax on the manufacturer's coupon, since the manufacturer reimburses the retailer. For example, if I were to purchase a movie that was $19.99 minus the $5 Target (retailer) coupon and then use a $3 off manufacturer's coupon, I would pay taxes from the $14.99 price, not $11.99.

[RBBrittain]

Here in Arkansas, we have always paid tax on manufacturer's coupons, but not on store coupons. That's because the manufacturer reimburses the store for the coupon's face value (plus a small handling charge found in the fine print); that's not necessarily the case for store coupons.

[Jwilly019]

Originally Posted by RBBrittain

Here in Arkansas, we have always paid tax on manufacturer's coupons, but not on store coupons. That's because the manufacturer reimburses the store for the coupon's face value (plus a small handling charge found in the fine print); that's not necessarily the case for store coupons.

Perhaps I had the coupons mixed up then, like I said, I wasn't entirely sure.

Justin