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BTLG Table of Contents > Sales and Use Tax Annotations > G > 280.0000 Gifts, Marketing Aids, Premiums and Prizes > Annotation 280.0565

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G

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280.0000 Gifts, Marketing Aids, Premiums and Prizes— Regulation 1670

Annotation 280.0565

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280.0565 Free Merchandise Based Upon Volume of Purchases. A taxpayer's customers earn coupons based on their previous purchases. These purchases are entirely subject to sales tax. The coupons entitle the customers to receive a various number of units of free merchandise. Upon redemption of the coupons, if the number of units purchased exceeds the number of free units of merchandise allowed, the customer is charged for the remaining units with tax reimbursement computed on the balance. Under these conditions, the free units are regarded as being sold with the previous units, which entitled the customers to obtain the free units. Since sales tax is reported on all the consideration received for the sale of the previous units, no further tax is due. 1/24/89.