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Publication 220

cluded sales tax, Grocer may also claim a deduction of $23.81 on his sales and use tax return for sales tax included in the price to play the video game. The $23.81 is computed as follows: $500 (to- tal sales) divided by 1.05 (1 plus tax rate) = $476.19 (taxable receipts); $500 - $476.19 = $23.81 (tax included in total sales).

Note: If the grocer in the above example had not conspicuously posted a sign indi- cating the prices included sales tax, the grocer would still report the $500 on line 1 of his or her sales and use tax re- turn, but the grocer may not claim a deduction on its sales and use tax return for any sales tax included and would re- port taxable receipts of $500 instead of $476.19.

3. Purchases of Video Games and Amuse- ment Devices

A grocer’s purchases of coin-operated video games and amusement devices and the re- pairs and parts for the machines are subject to Wisconsin sales or use tax.

  • IV.

    OTHER RELATED ITEMS

    • A.

      Discounts, Coupons, Rebates, and SNAP

(Food Stamps)

Are discounts, coupons, and rebates subject to Wisconsin sales tax? The answer depends on whether the grocer or the manufacturer offers the discount, coupon, or rebate and whether the item being sold is subject to Wisconsin sales tax.

1. Manufacturer’s Discounts, Coupons, and Rebates

Manufacturer’s Discounts, Coupons, and Rebates - Taxable Items: Payments re- ceived by a grocer from a manufacturer for coupons issued by the manufacturer, re- deemed by the grocer, and which entitle the customer to a “free” taxable item or reduce the price paid for a taxable item, are part of

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the “sales price” of the taxable item and are subject to Wisconsin sales tax. A grocer may charge the customer the sales tax due. How- ever, coupon handling fees paid by the manufacturer to the grocer are not subject to Wisconsin sales tax.

Example 1 - Manufacturer’s Coupon for Free Candy Bar: Customer receives a manufacturer’s coupon for a free can- dy bar, which normally sells for 75¢. Customer gives Grocer the coupon and receives a candy bar. Grocer then pro- vides the coupon to Manufacturer, who pays Grocer 75¢ plus a 10¢ handling fee for the coupon.

Since the candy bar is a taxable item, Grocer reports the 75¢ as receipts sub- ject to Wisconsin sales tax. Grocer may charge Customer the sales tax due on the 75¢. The 10¢ handling fee is not subject to Wisconsin sales tax.

Example 2 - Manufacturer’s Coupon for Reduced Price Laundry Soap: Cus- tomer purchases a box of laundry detergent which Grocer sells for $4. Customer presents to Grocer, a coupon from Manufacturer which entitles Cus- tomer to 50¢ off the $4 selling price of the detergent. Grocer provides the cou- pon to Manufacturer who pays Grocer 50¢ plus a 10¢ handling fee for each coupon redeemed. The amount subject to Wisconsin sales tax is $4, which is the $3.50 received from Customer plus the 50¢ received from Manufacturer. Grocer may charge Customer Wisconsin sales tax on the entire $4. However, the 10¢ handling fee is not subject to Wisconsin sales tax.

Manufacturer’s Coupons and Rebates - Nontaxable Items: Payments received by a grocer from a manufacturer for coupons is- sued by the manufacturer, redeemed by the grocer and which entitle the customer to a “free” nontaxable item or reduce the price paid for a nontaxable item, are not subject

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