http://www.savingadvice.com/blog/2008/04/20/102106_2106.html Bridging the gap between saving money and investing Wed, 08 Oct 2008 05:15:34 +0000 http://wordpress.org/?v=2.6.1 http://www.savingadvice.com/blog/2008/04/20/102106_2106.html#comment-289234 Tax Man Mon, 21 Apr 2008 14:40:30 +0000 http://www.savingadvice.com/blog/2008/04/20/102106_2106.html#comment-289234 In general, you pay sales tax on what the retailer charges for the item (e.g. $10 sale x 10% tax = $1 sales tax). If the retailer, reduces the price, the tax is also reduced (e.g. $2 discount so now we have an $8 sale x 10% tax = $0.80 sales tax). However, with coupons from outside parties (not coupons the retailer creates) the retailer still receives full price after reimbursement by the vendor for the coupon (e.g. $10 sale x 10% tax = $1 sales tax; $9 paid by customer, $2 paid by mfg.). That is why the customer pays sales tax, even if the item is free. The retailer is still receiving full value for the item and that is what the tax is based on. In an ideal world, the mfg. would pay the sales tax on the coupon, but when a retailer submits coupons to the mfg., they could be for sales that occurred in all 50 states and neither the retailer nor the mfg. would know all the correct tax rates or be able to report the correct tax back to the correct taxing authority. So taxis collected from the customer at the time of sale. With counties, cities, and special districts, there are over 7,000 different authorities who collect sales tax. In general, you pay sales tax on what the retailer charges for the item (e.g. $10 sale x 10% tax = $1 sales tax). If the retailer, reduces the price, the tax is also reduced (e.g. $2 discount so now we have an $8 sale x 10% tax = $0.80 sales tax). However, with coupons from outside parties (not coupons the retailer creates) the retailer still receives full price after reimbursement by the vendor for the coupon (e.g. $10 sale x 10% tax = $1 sales tax; $9 paid by customer, $2 paid by mfg.). That is why the customer pays sales tax, even if the item is free. The retailer is still receiving full value for the item and that is what the tax is based on. In an ideal world, the mfg. would pay the sales tax on the coupon, but when a retailer submits coupons to the mfg., they could be for sales that occurred in all 50 states and neither the retailer nor the mfg. would know all the correct tax rates or be able to report the correct tax back to the correct taxing authority. So taxis collected from the customer at the time of sale. With counties, cities, and special districts, there are over 7,000 different authorities who collect sales tax.

]]> http://www.savingadvice.com/blog/2008/04/20/102106_2106.html#comment-289028 Hilary Mon, 21 Apr 2008 06:20:33 +0000 http://www.savingadvice.com/blog/2008/04/20/102106_2106.html#comment-289028 Ugh, I just paid sales tax on a cell phone that was literally free with my contract renewal. The tax ended up being $11, which isn't a big deal for a new phone, but since it was an in-store discount, it sounds like it was bogus. Bummer. Ugh, I just paid sales tax on a cell phone that was literally free with my contract renewal. The tax ended up being $11, which isn’t a big deal for a new phone, but since it was an in-store discount, it sounds like it was bogus. Bummer.

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