This doesn't seem right!

[leahjade]

I had a big order today and lots of extreme couponing (for me that is!) My bill was $100 and I had $50 in coupons. Walmart charged me tax on the entire original before discount price. Is this how most stores do it? I never usually have that many coupons so maybe it's happened before and I never noticed.

 

[marmalade]

You always pay tax on the original amount, not the after coupon amount.

 

[Debbie]

Yep, that's how it's done!

 

[Halbleib1]

There was a big local news story here in PA about Walmart doing that. Someone wrote into the news to tell them about it as the state does not charge tax on the whole amount but on the after discount amount. Walmart is pocketing the extra tax that they charge. They are not paying it into the state. The news warned people to watch their receipts and to use their coupons elsewhere. After the news story I have been watching and I have only found that besides Walmart the only other store I have found that does this is Best Buy. The problem is the state can not do anything about it because of the way the law is written. So for now Walmart and other stores that do it are making an extra profit.

 

[disneylove69]

There are signs posted in California retailers now that it is law (state?) that they must charge tax on the whole price before coupons, rebates, etc. State was losing too much money I guess. I saw it even posted at an ARCO gas station.

 

[Tinker'n'Fun]

That is how is always has been done here. Same with percentage off coupons at Dept. stores. You always pay tax on the total pre-coupon/discounts.

 

[ilovemk76]

You always pay tax on the original amount, not the after coupon amount.

It depends on the state you live in. I bought an item that was $12 today and had a $10 coupon. I paid $2 plus the tax on $2 (not on $12).

 

[Keli]

In KY sales tax isn't charged on food which is nice.

 

[Tink-aholic]

In NH, there is no sales tax at all.

 

[leahjade]

You always pay tax on the original amount, not the after coupon amount.

So not true - my local grocery chain only charges tax after coupons are deducted. After doing research on this, I've found that it's up to each state and each store how to handle sales tax.

 

[ajh88]

I've always thought it was the amount before coupons were applied that got taxed. If I bought a $1 item with a $1 off coupon, I would still have to pay the tax for it, even though my "after coupon amount" would be zero. I thought coupons even said that...something like the consumer is still responsible for sales tax, blah, blah, blah.

ETA: I'm not sure they are "pocketing" the extra tax collected...they have still sold a product for price $X and collected tax on that amount. Just because the consumer gave them a piece of paper entitling them to a discount on the product, the sales price of the product didn't necessarily change. The manufacturer will eventually pay the store for the amount of the discount, thus resulting in the sales price being the full amount $X. IDK, in my mind it actually makes sense to charge tax on the entire amount but what do I know!?! I'm sitting here looking at a receipt from Toys R Us that charged me tax only on the amount after my coupons were deducted, so go figure.

 

[MissUndastood]

so how do those TLC extreme couponers (?) only pay 3.26 on a 1213.64 bill?

 

[njmom47]

I am as confused as the above posters! I have worked for supermarket companies for over 30 years and I am sitting here with my receipt from today's shopping trip, and I can't figure it out either....

 

[ajh88]

so how do those TLC extreme couponers (?) only pay 3.26 on a 1213.64 bill?

Maybe they live in a state the doesn't charge sales tax on food?

Or, they have "overage" from their coupons, which maybe goes towards the total they owe OOP - like they have a $1 off coupon but their item only costs 50 cents, so they get 50 cents applied to the rest of their bill? Again, I'm not totally sure how this works, maybe just one possibility.

 

[Cheshire Figment]

Here is a basic explanation.

As a general rule when you have a "Manufacturer's Coupon", which is what most grocery coupons are, you are paying the full price and are receiving a rebate from the manufacturer. Therefore you pay tax on the purchase. The store is acting as agent for the manufacturer, and giving you the rebate on the spot.

The two exceptions to this are both when the store itself is giving you a discount, which is a reduction of the selling price.

An example might be you go to a restaurant and there is a promotional coupon from the store for a certain amount (or percentage) off the meal, such as buy one and get a second for half price. This is an unrestricted discount and you pay the tax on the final billed price. If you have the Tables in Wonderland Card, and use it for a discount on meals at Disney, you will pay the gratuity at the full price but the sales tax only on the 80% of the menu.

If you have a store that doubles coupons, and let's say you have a 50¢ manufacturer's coupon for a $3.00 taxable item you will get a discount of $1.00 but you will pay the tax on $2.50. This is because the store is giving you an unrestricted discount of 50¢ which lowers the selling price to $2.50 and you are receiving a 50¢ rebate from the manufacturer.

This is the simple explanation, and is followed by all states that have sales taxes.

Mike (CPA Retired)

 

[seasheller]

Wow! I like that explanation!
Now, I know I'm changing the subject, but the last time I ate at Outback they figured the 18% tip amount on the food plus tax total. Is this the norm? I've always tipped on the food amount only. Called Outback but they never returned my call.

 

[stitchlovestink]

That is how is always has been done here. Same with percentage off coupons at Dept. stores. You always pay tax on the total pre-coupon/discounts.

depends on the state...
Here in MD...you pay tax on the amount before a mfr coupon, BUT you only pay sales tax on the price of them item after a percentage off coupon offered by a store.
And in MD, most food is NOT taxable, but there are exceptions such as junk foods, sodas and the like.

 

[princessnoelly]

In KY sales tax isn't charged on food which is nice.

Us too...but, in NM they might take it away. However, before we always paid on the total amount before coupons were deducted. It's the same on a rebate for a car too, taxed on the total amount- coupons/rebates are seen as 'cash down'.

 

[m&m's mom]

Wow! I like that explanation!
Now, I know I'm changing the subject, but the last time I ate at Outback they figured the 18% tip amount on the food plus tax total. Is this the norm? I've always tipped on the food amount only. Called Outback but they never returned my call.

That would irritate me since I always tip on the amount before tax. Why should you tip on tax?

 

[scrapquitler]

I had a big order today and lots of extreme couponing (for me that is!) My bill was $100 and I had $50 in coupons. Walmart charged me tax on the entire original before discount price. Is this how most stores do it? I never usually have that many coupons so maybe it's happened before and I never noticed.

It depends on the state law where the store is located. Sales tax charges are determined by the state, not by the store.

Here in CT, you get charged on the 'after coupon' price. There is a proposal in the legislature to change that (in fact, the governor has proposed that it be changed to use the pre-sale price to computer sales tax on ALL Purchases, with or without a coupon...so a piece of furniture that is regular $1500.00 on sale for $1000.oo would be charged sales tax based on $1500.00! )