Grocers - How Do Wisconsin Sales and Use Taxes Affect Your Operations?
to Wisconsin sales tax. In addition, the cou- pon handling fees paid by the manufacturer to the grocer for these items are also not subject to Wisconsin sales tax.
Example 1 - Manufacturer’s Coupon for Free Orange Juice: Customer re- ceives a manufacturer’s coupon which entitles Customer to a free gallon of 100% pure orange juice. Customer gives Grocer the coupon and receives the or- ange juice, which usually sells for $2.75. Grocer provides the coupon to Manufac- turer who pays Grocer $2.75 plus a 50¢ handling fee.
Since orange juice is a nontaxable item, the $2.75 received from Manufacturer is not subject to Wisconsin sales tax. The 50¢ handling fee is also not subject to Wisconsin sales tax.
Example 2 - Manufacturer’s Coupon for Reduced Price Coffee: Customer purchases a can of coffee which Grocer usually sells for $10. Customer presents a coupon from Manufacturer which enti- tles Customer to $1 off the selling price of the coffee. Grocer provides the cou- pon to Manufacturer who pays Grocer $1 plus a 25¢ handling fee for each cou- pon redeemed.
The $9 received from Customer is not subject to Wisconsin sales tax because cans of coffee are not subject to Wiscon- sin sales tax. The $1 received from Manufacturer is not subject to Wisconsin sales tax because the amount is related to an item (can of coffee) which is not subject to Wisconsin sales tax. The 25¢ handling fee is also not subject to Wis- consin sales tax.
2. Grocer’s Discounts and Coupons
Discounts and coupons offered by grocers and which are not reimbursed by a third par- ty are not subject to Wisconsin sales tax. This includes discounts offered by grocers
where the grocer “matches” a discount of- fered by a manufacturer (e.g., double coupon days). No Wisconsin sales tax should be charged on the discounts and cou- pons offered by grocers. See Part IV.A.1. on pages 44 to 45 for the treatment of manufac- turer’s coupons.
Grocer’s Discounts and Coupons - Taxa- ble Items: The following examples describe the tax treatment of discounts and coupons offered by grocers on taxable items.
Example 1 - Grocer’s Coupon Offered for Reduced Price Item: Grocer offers a coupon which entitles customers to 50¢ off the purchase price of a 12-pack of soft drinks. The 12-pack usually sells for $4.50. Customer provides Grocer with the coupon when purchasing the soft drinks along with $4. Grocer’s total sales subject to Wisconsin sales tax from the soft drinks are $4 ($4.50 - 50¢ cou- pon = $4). Grocer should charge Customer sales tax on the $4.
Example 2 - Grocer’s Coupon Offered for Free Items - No Purchase Required: Grocer offers a coupon which entitles a customer to a free package of napkins. Customer presents the coupon to Grocer. Since Grocer did not have any receipts with respect to the napkins, no sales tax is due on the transfer of the napkins to Customer. However, Grocer is liable for Wisconsin sales and use tax on Grocer’s purchase price (cost) of the napkins. Grocer should not charge Customer any tax on these napkins.
Example 3 - Grocer’s Coupon Offered for Free Taxable Item - Purchase of Taxable Item Also Required: Gro- cer offers a coupon which entitles a customer to free napkins with the pur- chase of paper plates (a taxable item). Customer purchases the paper plates and receives the free napkins.