Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 295.0153


295.0153 Coupon Incentive Plan. In compliance with an order by the California Public Utilities Commission to establish programs that encourage the conservation of natural gas, a utility company proposes to establish a coupon incentive plan. Under this plan, the utility company will distribute coupons to its customers which can be used to reduce the purchase price of certain energy saving measures at participating retail stores. The retailers will reduce the cost of the item by the redemption value of the coupon. They will then be reimbursed by the utility company for the face value of the coupon plus a small handling fee. The utility company itself may sell certain of the items to purchasers on the same basis as sales made by other retailers.

The application of the sales tax to sales of energy saving measures sold by the utility company and by participating retail stores is as follows:

(1) The utility company as retailer: The utility company does not receive its full selling price on the sale. The price is discounted to the extent of the value of the coupon issued by the utility company to its customer. Taxable gross receipts of the utility company are therefore the retail price reduced by the value of the discount allowed and taken on the sale. (Section 6012(c)(1).)

(2) Sales by participating retail store: The retailer receives the full selling price of merchandise from the customer (i.e., cash plus a coupon redeemable at full value from the utility company.) The gross receipts of the retailer includes the cash received as well as the coupon value. 6/25/81.