Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
280.0000 GIFTS, MARKETING AIDS, PREMIUMS AND PRIZES— Regulation 1670
280.0767 Lipstick in Exchange for Empty Containers. A firm enters into a promotional program whereby a customer receives a free lipstick if she returns six empty make-up containers. The containers have no value and are discarded. The firm believes that the lipstick is not taxable as a premium sold along with the other items. The furnishing of the lipstick is a gift of tangible personal property. In this case, it is not a premium furnished upon the purchase of six items. The purchaser has no contract right to the lipstick and the promotion can be terminated at will. Thus, even if the customer had purchased six make-up items, she would not receive lipstick if the promotion had ended. The firm is the consumer of the lipstick furnished and tax applies to its cost. 10/25/96.