23VAC10-210-430: Coupons (redeemable)

A. Manufacturer's coupons. The value of a manufacturer's coupon is included in the sales price of the advertised merchandise. For example, when a retailer accepts $.80 in cash and a manufacturer's coupon valued at $.20 for a product, the tax is computed on $1.00.

However, where a retailer redeems a manufacturer's coupon for an amount in excess of the coupon's value, e.g., "double coupon value" discounts, the excess is treated as a discount to the product's price and may be deducted in computing the tax. For example, a retailer advertises that he will give double value for all manufacturer's coupons. A customer purchases a $3.00 jar of coffee and gives the retailer a $.50 manufacturer's coupon, thus paying only $2.00 for the coffee. The tax is computed on $2.50 which is the sales price of the coffee less the extra $.50 retailer discount.

B. Retailer's coupons. The value of a retailer's coupon is not included in the sales price of the advertised merchandise. For example, when a retailer accepts $.80 in cash and a retailer's coupon valued at $.20 for a product, the tax is computed on $.80. This coupon has no value to the retailer and is an advertisement of a discount.