Tax Type
Retail Sales and Use Tax
Description
Coupons, Premiums, and Cash Discounts
Topic
Basis of Tax
Date Issued
08-04-1998
August 4, 1998
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter in which you request a ruling on behalf of (the ``Taxpayer'), concerning the proper sales tax treatment of manufacturers coupons used in retail grocery transactions involving federal food stamp coupons.
The Taxpayer wishes to know if the value of manufacturers' coupons is subject to sales tax when used to make purchases that are paid for with food stamps. This ruling also applies to the use of WIC drafts issued through the Virginia Special Supplemental Food Program for Women, Infants, and Children.
RULING
Title 23 of the Virginia Administrative Code 10-210-430(A) discusses the application of sales tax to manufacturers' coupons and states that the value of a manufacturer's coupon is included in the sales price of the merchandise. Therefore, the sales tax is computed on the full price of the item and credit is then given to the customer for the value of the manufacturer's coupon. In contrast, the value of retailers' coupons is not included in the sales price of merchandise. Retailers' coupons are treated as advertisements of price discounts. The sales tax is computed on the price of the item after deducting the discount.
Title 23 VAC 10-210-6070 inteprets the exemption in Sec. 58.1-609.10(6). Paragraph C explains that the exemption applies only to ``food or other items of tangible personal property actually purchased with food stamps or W/C drafts.' (Emphasis added). Based on this regulation, purchases made with cash or other types of consideration (such as manufacturers' coupons) are taxable. However, purchases paid for with retailers' coupons and food stamps or WIC drafts are exempt from sales tax.
I have enclosed a copy of a letter dated February 8, 1993, which was issued by The Department of Health's Division of Public Health Nutrition to WIC vendors. This letter addresses the use of manufacturers' coupons used in transactions paid for with WIC drafts. The Taxpayer may also use the procedure described in this letter for purchases made with food stamps and manufacturers' coupons.
I trust this ruling addresses your concerns. If you have any questions, please contact ***** in the Office of Tax Policy at ***** .
Sincerely,
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This will reply to your letter in which you request a ruling on behalf of (the ``Taxpayer'), concerning the proper sales tax treatment of manufacturers coupons used in retail grocery transactions involving federal food stamp coupons.
The Taxpayer wishes to know if the value of manufacturers' coupons is subject to sales tax when used to make purchases that are paid for with food stamps. This ruling also applies to the use of WIC drafts issued through the Virginia Special Supplemental Food Program for Women, Infants, and Children.
RULING
-
- Code of Virginia Sec. 58.1-609.10(6) provides an exemption for:
-
- Tangible personal property purchased with food coupons issued by the United States Department of Agriculture under the Food Stamp Program or drafts issued through the Virginia Special Supplemental Food Program for Women, Infants, and children.
Title 23 of the Virginia Administrative Code 10-210-430(A) discusses the application of sales tax to manufacturers' coupons and states that the value of a manufacturer's coupon is included in the sales price of the merchandise. Therefore, the sales tax is computed on the full price of the item and credit is then given to the customer for the value of the manufacturer's coupon. In contrast, the value of retailers' coupons is not included in the sales price of merchandise. Retailers' coupons are treated as advertisements of price discounts. The sales tax is computed on the price of the item after deducting the discount.
Title 23 VAC 10-210-6070 inteprets the exemption in Sec. 58.1-609.10(6). Paragraph C explains that the exemption applies only to ``food or other items of tangible personal property actually purchased with food stamps or W/C drafts.' (Emphasis added). Based on this regulation, purchases made with cash or other types of consideration (such as manufacturers' coupons) are taxable. However, purchases paid for with retailers' coupons and food stamps or WIC drafts are exempt from sales tax.
I have enclosed a copy of a letter dated February 8, 1993, which was issued by The Department of Health's Division of Public Health Nutrition to WIC vendors. This letter addresses the use of manufacturers' coupons used in transactions paid for with WIC drafts. The Taxpayer may also use the procedure described in this letter for purchases made with food stamps and manufacturers' coupons.
I trust this ruling addresses your concerns. If you have any questions, please contact ***** in the Office of Tax Policy at ***** .
Sincerely,
Rulings of the Tax Commissioner