Tax & Accounting Blog

Connecticut Coupon Conundrum

Indirect Tax, Sales and Use Tax March 3, 2011

Connecticut shoppers are more than a little angry over Connecticut governor Malloy’s latest proposal aimed at closing the state’s budget shortfall. Malloy wants coupon users to be taxed on the original price rather than the discounted price. For example, the sales tax would be imposed on the $80 price of a pair of shoes , not the $50 sales price. Stranger still if you bought a $2.99 bottle of detergent and used a $3.00 coupon you would pay tax on $2.99 even though you paid nothing for the soap. How can you tax a consumer on a non-existent sales price? According to Connecticut law “sales price” does not include “the full face value of any coupon used by a purchaser to reduce the price paid to a retailer for an item of tangible personal property”. Hmmm. It will be interesting to see what happens with this one.