Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655
(a) RETURNED MERCHANDISE
(2) "Full Sale Price"
490.0320 Trading Stamps. A customer purchases a $2 article paying 6¢ sales tax and is also given trading stamps which cost the seller 5¢ and which cost is deducted from gross receipts as a cash discount.
The customer returns the merchandise but is unable to return the trading stamps. The seller therefore charges the customer 10¢ for keeping the stamps, and refunds to the customer $1.96.
The amount of cash discount is the amount paid by the retailer for the trading stamps. Under the example above, the original selling price of the article was, accordingly, $2.01 and, unless that amount is refunded, the deduction for returned merchandise should not be allowed. 7/17/53.