"Instant Rebate" rather than "Price drop" or "Sale Price" -- Why?

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I'm sure other stores do it from time to time, but I can't recall any specific examples now. Yesterday I bought some 2-packs of LED BR30 bulbs at Costco: $14.99 less a $12.00 "Instant Rebate" courtesy of Consumers Energy -- and the 6% MI Sales Tax is charged on $14.99 rather than on the $2.99 Net Price.
Does every state charge ST that way, and why do stores price items that way?
Perce
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On Saturday, November 21, 2015 at 12:28:03 PM UTC-5, Percival P. Cassidy wrote:

That's how it works here in NJ. Good question why they do it that way, instead of just passing along lower pricing where you wouldn't have to pay sales tax on the full, pre-discount price.
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On Sat, 21 Nov 2015 12:28:00 -0500, "Percival P. Cassidy"

I never paid any attention to this in the past. I will in the future though. I'm just guessing, but if that "instant" rebate would have been a "mail in" rebate the buyer would still pay the sales tax on the full price. Having said that, I'm thinking the government is getting more revenue than it deserves. That doesn't surprise me though.
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On Sat, 21 Nov 2015 12:08:50 -0600, Gordon Shumway

The "cupon" came from Consumer's Energy - not from Costco. Costco sold the lights for $14.99. You paid $12.00, and Consumer's Energy paid the other $2.99 on your behalf.. Costco has to remit tax on the entire $14.99, because that WAS the selling price.
The cupon likely had limitations on it too - a small retailler could not come in and buy 10 cases of bulbs from Costco for $12.00 each to resell for the regular price of $14.99 ( and $12.00 was very possibly less than what Costco paid from the distributor, even at their high sales/purchasing volumes)
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On 11/21/2015 03:54 PM, snipped-for-privacy@snyder.on.ca wrote:

The light bulbs with the Consumers Energy "instant rebate" were only one example. But at the same time I bought some chairs that had a $5 "Instant Rebate" (no indication that it was from the manufacturer or any other entity), but on those too the ST was charged on the pre-Rebate price.

I think some US states (not MI) prohibit the limiting of quantities.
Perce
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On Saturday, November 21, 2015 at 8:17:46 PM UTC-5, Percival P. Cassidy wrote:

I was just looking at TVs online at Costco and they have instant rebates on TVs too. That rebate isn't coming from some third party either, it's apparently from the manufacturer.
I guess the situation may be this. Let's say I'm the manufacturer and I have TVs that have a MSRP of $400, I sell them to Costco for $200. The channel is full of TVs, they've been sold at those prices for a while. I want to boost sales. So, I offer a $40 instant rebate to the consumer for each TV sold from 11/22 to 12/22. Why to the consumer? Because it's simple and for sure the savings is going to the consumer, to lower the price, and not into Costco's pocket, or half into Costco's pocket, etc. It also makes the consumer feel good about the manufacturer cutting them a break.
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On Sat, 21 Nov 2015 12:28:00 -0500, "Percival P. Cassidy"

I've been in Md. 32 years but I can't remember if it's Md. or NYS that I noticed did what you say. I didn't notice that either didn't do it.
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On Sat, 21 Nov 2015 12:28:00 -0500, "Percival P. Cassidy"

That is the law. Using a cupon to reduce price by a fixed amount, tax must be pain on the "marked price" of the product. The cupon (x$ off) is considered as "money"
Any product marked down must be sold at the lowest marked price, even after the promotion is over. Not kosher to re-tag the items with a higher price. And even if, for instance, the cupon "instant rebate" or special price" is for a maximum of 10 per purchacer, the marked price is the maximum that can be charged. That's why you see signs like "Regular Price $15.99 Today only $9.99. Discount will be applied at checkout" - with the sticker on the item marked at $15.99.
A "X% off" offer is considered the same - and the marked price is the "before discount price". Tax is paid on the "discounted price" - the price actually paid..
This migh not be true everywhere - but it is here in Ontario - and many other places accross North America.
We were shopping for kid's shoes years ago - and the shoe store had a big display of shoes and a sign "all shoes on this table half price" I found 2 pair the kids liked - nice shoes, regularly priced at something like $28 but with $14.00 price tags on them. At the checkout they were run through at $14 each. I said "hold it!!!!" These shoes are on sale, half off. The teller said "The marked price IS half off. they are regularly $28.00" I told them they better change the sign to read "marked price is half off siggested retail", but in the mean time I was paying only $7 per pair - and if anyone in the line behind me was buying dhoes from that display, they were getting the same price - untill the sign was removed, or I was reporting them to consumer affairs.
I got the price. The sign came down...
It is all about "fairness in advertizing" and tax laws.
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On Sat, 21 Nov 2015 12:28:00 -0500, "Percival P. Cassidy"

I may be a skeptic but I wouldn't be shocked to find out Costco actually only paid the state based on the final sale price and put the difference in their pocket. It would really depend on how the state law was written on collecting sales tax.
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On Sat, 21 Nov 2015 19:59:41 -0500, snipped-for-privacy@aol.com wrote:

I wouldn't put it past them either. It's incredible how low businesses (and people) can go. But doesn't the computer total every penny attributed to sales tax on their receipts. It's not like someone adds it all up each month with an adding machine. It would require a really good explanation not to pay what the total shows, and not to then correct the computer so it matched what they were actually paying. Unless of course they just had a little program, assembled and linked in, with no source code to be found, that modified the totals. That's what VW would do.
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wrote:

One thing about computers is they do exactly what you program them to do.
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On Sun, 22 Nov 2015 11:12:18 -0500, snipped-for-privacy@aol.com wrote:

And forensic accountants can decipher what has been done. Under the Canadian/Ontario HST system you might get away with it for a short time, but they WOULD catch you - and getting caughrt definitely is not worth it!!!!. Do you want a monthly tax audit, or a tax audit spotcheck numerous times, with no warning, over the next 5 years??? I doubt it.
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On Saturday, November 21, 2015 at 7:59:50 PM UTC-5, snipped-for-privacy@aol.com wrote:

In NJ it definitely works as described, the sales tax is on the full price, before the rebate. I would seriously doubt a major chain like Costco is going to cheat the state sales tax folks. Some small shyster somewhere could be doing it.
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snipped-for-privacy@aol.com posted for all of us...

I believe Costco or any reseller does not pay sales tax because of the structure. It is only collected at the retail or usage level.
--
Tekkie

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On Monday, November 23, 2015 at 2:50:04 PM UTC-5, Tekkie® wrote:


bs



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What is being discussed is Costco or any other merchant, collecting sales tax on products or services they sell to their customers and then forwarding it on to the state.
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wrote:

Up here in Canada they symplified things a bit with the HST - Harmonized sales tax. It is a combination of the provincial saltes tax and the federal Goods and Services Tax..
Used to be a reseller or business paid the GST at purchace, and charged it on sale - paying the government the tax on the increase in price from purchase to resale, as well as on any labour charge.
They bought PST exempt, charged the PST, and remitted it to the provincial government less a very small collection fee.
Now with the HST, there are no exceptions for resellers - I pay the full HST on everything I buy. I collect the HST on everything I sell, including my time. I remit the difference to the government. I don't get a collection fee, but now everything I use as part of doing business is a credit - I don't pay the tax on business expenses.
Works out pretty good.
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On 11/24/2015 7:10 PM, snipped-for-privacy@snyder.on.ca wrote:

In the States, sales tax policies (and laws) vary from location to location.
For example, in CT, I had to charge sales tax on my *time* -- and, had to open a bank account solely for the storage of said taxes.
In many places, sales tax is termed "transaction privilege tax" or even "use tax". Often, the law states that failure of the seller to COLLECT that tax does not release the purchaser from the obligation to *pay* it!
E.g., when I purchase equipment "mail-order" (out of state) for my business, I have to track which sellers collected sales tax from me for that purchase (and, in theory, remitted it to the state) and which did not. For those that did not, I have to "out of the goodness of my heart" (:>) remit the equivalent funds in my monthly filing.
This can get complicated as different vendors may collect different subsets of the "total" sales tax *due*. Some will collect the same taxes that I would pay had I walked up to the corner store to make the purchase. Others may only collect the *state* portion of the sales tax. (we have state, county and city sales taxes, here)
Of course, you can pretend you didn't know this and FAIL to remit the taxes due. That, of course, is called fraud and opens up a whole can of legal worms... (an accountant/lawyer defending you would quickly consume more in fees than you could ever "save")
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On Tue, 24 Nov 2015 19:23:19 -0700, Don Y

That's what I like about the "passthrough" nature of the HST.
If I don't pay tax on the purchace, and I charge tax on the sale, I don't get the offsetting credit for the tax paid - the government gets the same tax as if I paid the tax and took the offset.
Sure makes the book=keeping easy Add up everything I pay out - add up the tax on what I pay out and right that down Add up everything I sell. Add up the tax collected on what I sell. Subtract the tax paid from the tax collected, and pay the government the difference. So in effect, I don't pay taxes on items consumed in the process of running my business - things like ink, paper, fuel for the company truck, my internet connection, etc.
Just need to be sure and carefull that what I claim is all legitimate expense
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On 11/24/2015 7:46 PM, snipped-for-privacy@snyder.on.ca wrote:

I pay (sales) tax on items consumed by the business. But, can then "write that off" as a business expense (in addition to the actual cost of the product consumed).
I *don't* have to pay sales tax on items that I resell -- but, have to collect sales tax(es) on any of those items that I *do* sell.
For this reason, I tend to have clients purchase <whatever> directly; it saves me the hassle of making the purchase, fronting my money to do so, waiting to be paid by the client -- in addition to the taxes -- and then having to remit these monies to the gummit. I.e., I'm not "marking up" these items at resale so there's no incentive for me to get involved in the purchase.
It also needlessly complicates cashflow; if I purchase a $20K item today, I've committed $20K of *my* funds (even if I'm given "terms" on that purchase) and now have to risk the "float" while waiting for the client's "accountant" to get around to writing me a check for that amount. And, at the same time, having to come up with the extra ~8+% "sales tax" to remit at month's end.
OTOH, if I'm making that same $20K purchase (+ tax) for myself, I can schedule when it best suits *my* cashflow, budgeting and tax planning. E.g., end of the year is always hectic trying to get last minute purchases on the books for inclusion in *this* tax year (so I don't lose a writeoff by letting the purchase slip into *next* year)
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snipped-for-privacy@snyder.on.ca posted for all of us...

I wish the US. would simplify the personal income tax. There used to be a consumer activist/accountant/good guy on the radio that label every tax "reform" act a CPA employment full employment bill... I'll shut up.
--
Tekkie

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