Bought an item about a week ago for $5K and got charged my 7% state tax. Vendor’s website promises to rebate any price drops within 30 days of purchase. Noticed yesterday that the price was now $4200, so sent an email requesting a $856 refund. Got the $800 credit today ( that’s the anti-rant) but they said they won’t refund the corresponding $56 excess state tax. So my tax rate on the final purchase cost is effectively 8.33% (the rant). Guess I should be grateful for small favors!

I agree with your rant. I too have found that sometimes a "sales" price is taxed at the original price vice the newer "sales" price. I have never figured out if that was legitimate or just gouging.

quote:

Originally posted by pedropcola:
I agree with your rant. I too have found that sometimes a "sales" price is taxed at the original price vice the newer "sales" price. I have never figured out if that was legitimate or just go
uging.

That would depend on the taxing state's code. Some states tax gross sale price and some do not.

That seems a bit vague. In the exact same states when I buy a car they tax the price I pay not the sticker price. Shouldn't that be the "gross" price as well? Like I said, not sure I'm not being gouged.

I’ve never been charged sales tax on the price I paid on a vehicle purchase if a cash incentive was involved.

Example:

50,000 - price before tax and incentives
- 5,000 - cash incentive
45,000 - price I’m paying

Every single time, the sales tax has been based on the $50,000 not the $45,000.

The incentive is treated like a rebate even though it’s an instant one. You buy Winchester ammo and pay sales tax on the amount you paid. You fill out the rebate and months later you get the rebate money, but that doesn’t affect the selling price of the ammo or the amount of sales tax you paid.

That’s the way rebates work and that’s what you got.

quote:

You buy Winchester ammo and pay sales tax on the amount you paid. You fill out the rebate and months later you get the rebate money, but that doesn’t affect the selling price of the ammo or the amount of sales tax you paid.

Isn't there going to be a difference between a rebate from manufacturer (who doesn't collect sales tax) and a retailer (who does)? This doesn't look like a rebate, this is a reduced sales price, adjusted after the initial sale was complete.

I'd bet this reduction will be netted off the retailers sales tax reporting to the state, so in this case they will indeed be keeping the difference. Question of whether it changes to a fraudulent representation of sales tax collected and not remitted unlikely to be pursued by any involved, including the state.

Yea I don’t think I’ve ever done that. I also am not sure what you mean by “cash incentive”.

My example. My Subaru sticker price is 32,000 dollars. I say “I’ll give you 29,000 dollars”. If they agree I pay tax on 29 not the sticker. I don’t know if I have ever gotten a “cash incentive”.

The confusing and potentially gouging part is it is applied inconsistently.

Rebate vs refund might be the sales tax issue.

The merchant remitted the tax to the State . You should contact the State Department of Revenue to see how to get a refund on the tax .

When you bought it you paid tax on the price agreed at purchase, any discounts, rebates, coupons or in this case price match is post sale and would not change the way the tax was calculated at the time of the sale.

States consider the tax calculation to be done POS, subsequently the return of the item would also create a return of taxes collected to the buyer since the sale was in fact negated.

In this case the original sale stands and as such the tax stays with the original purchase price.

The price match is in effect like a post sale rebate, where the seller/manufacturer is refunding an amount to the consumer but it doesn't change the amount paid at sale.

Since the discount is post sale, it doesn't change the taxable sale amount and as such, no refund in tax is generated.

At least that's as much as I can glean from the examples in FL's TIP sheet.

PDF Link

^^^Yep.

quote:

Originally posted by pedropcola:
Yea I don’t think I’ve ever done that. I also am not sure what you mean by “cash incentive”.

My example. My Subaru sticker price is 32,000 dollars. I say “I’ll give you 29,000 dollars”. If they agree I pay tax on 29 not the sticker. I don’t know if I have ever gotten a “cash incentive”.

The confusing and potentially gouging part is it is applied inconsistently.

From Edmonds How to Buy a New Car:

“Know the Incentive Types
Here is a quick rundown on the incentives you'll see as you're shopping:

Customer Cash: Customer cash, also called bonus cash, is a rebate the manufacturer gives to buyers. Buyers typically apply it to the price of the vehicle, but they can sometimes opt to keep the money for themselves. Bonus cash can also be applied to the finance price of a lease.

<snip>

Low APR Financing: This incentive offers interest rates on financed vehicles ranging from zero to about 5 percent. A buyer needs excellent credit to qualify, however, so not everyone will be eligible. This is why we advocate that buyers get preapproved for a car loan before they go shopping. That way, they'll have an interest rate to compare to what the dealer offers. They'll also have something to fall back on in case they can't qualify for a dealer-offered low APR financing deal. The low interest rates are sometimes tied to the length of the loan term, so pay attention to this detail.

<snip>

Special Leases: These also are known as lease specials or lease deals. Manufacturers often offer special lease programs through their captive financing companies. Most of the lease programs listed on Edmunds are of this variety and are formally known as subvented or subsidized leases. These subsidized leases are generally based on a residual value that's much higher than the actual worth of the car at the end of the lease. In other words, the carmakers and dealers tweak the residual value to bring down the monthly payment and thereby make the vehicle more appealing.”

Cash incentive would be the first one on the list above. Right now, Kia has one for $7,500 on their EV because it doesn’t qualify for the federal tax credit. Most of them are smaller amounts like $500 for first time buyer, $500 for college student, $500 first responder, $500 military, etc.

I went round and round with the finance guy the first time, long before I had a cellphone let alone one connected to the internet. My point was I never touched the cash, therefore, it was a reduction of the selling price, not a rebate, and I shouldn't pay sales tax on that amount. When I went to work the next day, I looked it up in our tax library and the finance guy was right, at least in Wisconsin at that time anyway.

Yep, never done that. I state a price I will pay, they counter, we agree to a price or we don’t. Like I said earlier, I’m not paying tax on a sticker price if I’m not paying sticker price. You seem to be talking about rebates from the manufacturer. I can’t say I’ve ever gotten a “rebate” that was anything to brag about. This discussion was about paying less than for whatever he bought. He should have gotten the taxes back. Period. It wasn’t a rebate or incentive. The price just dropped. If he returned the item he would have gotten it all back. If he then bought it at the new price he would have paid $56 less. They kept it. It ain’t going to the state. Gouging.

The portion of the of the purchase price given back to the OP is a rebate by definition. He didn't return anything, he didn't get a refund. He got an after the sale price adjustment aka a rebate. No portion of the original sale was undone per se.

Don't believe that? Then call the state sales and use tax department and ask them. If I'm wrong, you can make some good money because they give rewards to people who report sales and use tax fraud.

I'd think that if a sale price was adjusted, and it comes out of the net sales for that day, then the sales tax due the state is also adjusted. In this case they also owe you the tax which was lowered on net sales, and which they did not pay.

A rebate come from a source other than the retailer collecting tax.

Semantics. They could have just as easily "processed" it as a return and a new sale at the new price. It isn't a rebate unless you engage in excessive mental gymnastics to make it so. If they just processed it as a new sale then no one loses money, not the seller not the buyer. The way they did it, if you believe they aren't pocketing that money come tax reconciliation time, cost the seller and didn't make them money. I ain't buying that. Come tax time the new actual sales price will go into the calculation and that 56 bucks will go back to them as a credit. Gouging, just months later via a tax form.

quote:

Originally posted by HRK:
PDF Link

From your very own document in the definition of rebate:

quote:

REBATES
Rebates provided by manufacturers to purchasers of tangible
personal property are not discounts allowed between the seller
and the purchaser. The initial purchase of the item and the
honoring of a rebate claim by the manufacturer are two separate
and distinct transactions. Sales tax is computed on the total sales price, without any deduction for the manufacturer's rebate.

The fact that the rebate is assigned by the purchaser to the
seller does not change the taxability of the transaction.
Retailer rebates offered by the selling dealer, when the selling
dealer does not receive reimbursement from another third party,
are considered dealer discounts and are excludable from the
sales price.

Even if someone wanted to engage in the mental gymnastics to call it a retailer rebate, that bullshit won't fly in FL, and likely every other state.

Retailer rebates offered by the selling dealer, when the selling dealer does not receive reimbursement from another third party, are considered dealer discounts and are excludable from the sales price.

I think the issue is murky. They did give you the price difference on the purchase price. I think they think the paperwork to get the tax money back is not worth it for them. On the other hand, when I return something, I get the purchase price and the tax that was paid.

quote:

Originally posted by pedropcola:
This discussion was about paying less than for whatever he bought. He should have gotten the taxes back. Period. It wasn’t a rebate or incentive. The price just dropped. If he returned the item he would have gotten it all back. If he then bought it at the new price he would have paid $56 less. They kept it. It ain’t going to the state. Gouging.

No, he paid the price agreed to at sale, that moment the price is set and the tax calculated and paid to the proper agency.

At a later date he found the product was less expensive, the dealers policy allowed a refund of the difference, not a reduction in price, those are two different things. They returned to him the difference in the price of the unit paid post sale.

This doesn't change the original purchase price and thus the tax calculation so the tax remains correct and that is per state law not the retailers to return, the retailer did it correctly.

If he wanted to pay less tax then he should have returned the item for full credit, which would initiate a full refund of taxes. Then in a new sale bought the item at the reduced cost, resulting in taxes being calculated on the new amount.

This was a dealer to consumer price rebate post sale. It doesn't change the taxable original sale amount or calculation.

Yikes. You win the semantics battle. The bottom line is whether at tax time the store inputs the actual price that was paid (the new lower price) into their tax form. If they do that, which I bet they do, the calculations will show that they overpaid their sales tax by, wait for it, 56 bucks. That amount will be returned to them and while it will show up in another column, it will in fact be returned to them.

Bottom line this store will be 56 bucks ahead at tax time.

As to your last point, I believe if he would have known how they were going to do it, he would have just returned it and bought it for the cheaper price. And saved 56 bucks. He found out after the fact and didn't want to make waves. I am putting words in the OP's mouth but that is what I would have done. I am not giving 50 bucks to the state or the store for giggles.

Actually, the fact that the item weighs in excess of 250 lbs. and I would have spent more than $56 in shipping (and hassle) costs returning it for credit only to buy another one at the lower price explains why I don’t mind ignoring the excess tax! It was an interesting discussion even if it still seems to be a bit murky. Just for grins, I did send the question to an industry group of professionals who deal in state sales tax issues. If they respond with anything definitive or legalese, I’ll post their comments too.