Georgia sales tax on manufacturer rebates
Coupons: Merchant and Manufacturers
Coupons: Merchant and Manufacturers
Sales price reductions arising from the use of coupons or coupon codes are treated in the same way that discounts are. We normally refer to these as “store” or “manufacturer’s” coupons.
Store Coupons
Store coupons are price reductions offered directly by the retailer and are not reimbursed by the manufacturer or distributor. These reductions in the selling price also reduce the amount subject to sales tax.
Because discounts are generally offered directly by the retailer and reduce the amount of the sales price and the cash received by the retailer, the sales tax applies to the price after the discount is applied.
Example 1:
Your normal selling price is $30 but you are offering a 5 percent discount for first-time customers.
- The tax base is $28.50.
Example 2:
The normal price is $30.00 but you are offering a $5.00 discount for returning customers.
- Your tax base (prior to any taxable shipping) is $25.00.
Manufacturer Coupons
If, however, the discount is sponsored by the manufacturer or the distributor and you will be reimbursed by either of these parties for offering the discount, the sales tax base is the full sales price and not the reduced sales price.
As noted below with manufacturer’s coupons, because the tax base is the amount of receipts you receive for selling the product, the states generally don’t distinguish whether the payment comes from the customer or by some third party.
As noted above in the Georgia definition, coupons that are reimbursed by a third party are NOT treated as a sales price adjustment. This rule is pretty uniform across the country.
Georgia Sales Tax on Manufacturer Rebates
In Georgia, if a manufacturer’s rebate or coupon is involved and the retailer is reimbursed by the manufacturer, the sales tax is calculated on the original sales price, not the reduced price offered through the rebate. Georgia aligns with the broader national practice that the source of the funds—whether the consumer or a third party—does not alter the taxable base.
Frequently Asked Questions
How does Georgia treat sales tax on store coupons?
Store coupons reduce the taxable sales price because they are considered a discount given directly by the retailer. Sales tax is applied to the final price after the store coupon is deducted.
Are manufacturer coupons taxable in Georgia?
Yes, if the retailer is reimbursed by the manufacturer for the coupon, Georgia requires that sales tax be applied to the original sales price before the coupon is applied.
What is the difference between a store coupon and a manufacturer coupon?
A store coupon is a discount offered directly by the retailer and reduces the taxable amount. A manufacturer coupon is funded by a third party (like a brand or distributor) and does not reduce the taxable sales price if the retailer is reimbursed.
Does Georgia follow the national standard on taxing manufacturer rebates?
Yes, Georgia aligns with the national approach where manufacturer-funded rebates or coupons do not reduce the sales tax base. The sales tax is still calculated based on the original price.
What happens if a retailer offers a discount but is later reimbursed by a third party?
In Georgia, even if the retailer initially offers a discount but is reimbursed by a third party like the manufacturer, the sales tax must be calculated based on the original (pre-discount) price.