When I purchased my converter box, the store charged $59.99 then added tax making it $64.18, then subtracted the $40 coupon, = $24.18. Shouldn't it have been $59.99-$40=$19.99, then tax at 7%=$20.39? If this is correct, how do I prove it to retailers?
On what amount should Taxpayer charge sales tax when the actual purchase price is reduced by a “TV Converter Box” issued by the Federal Government?
Taxpayer should collect sales tax on the amount actually paid by the customer, after reduction of the coupon amount.
The coupon at issue is a Digital-to-Analog Converter Box Coupon authorized in the Digital Television Transition and Public Safety Act of 2005. Between January 1, 2008, and March 31, 2009, eligible U.S. households can request up to two $40 coupons to be used towards the purchase of up to two coupon-eligible converter boxes. The Federal Government will reimburse Taxpayer for the dollar value of the coupon. It is the understanding of this Office that the Converter Box Coupon will be identified on Taxpayer’s receipts as a voucher discount, or coupon, and that the converter itself will also be identified on the same receipt as an item purchased.
Pursuant to Department regulation, amounts representing coupons or discounts shall be excluded from the taxable purchase price of a product if both the item purchased and the coupon are described on the cash register tape. 61 Pa. Code § 33.2(b)(2). If both the original purchase price of the product bought, and the coupon or discount at issue are noted on the cash register tape produced by the retailer, the retailer is allowed to impose the sales tax on the amount actually paid by the customer only, and not the original price of the item or items purchased. As both the coupon and the converter will be noted on Taxpayer’s receipt, the taxable purchase price of the converter can be reduced by the amount of the coupon.