Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 540.0175

540.0175 Coupon Books. A firm will purchase grocery coupon certificate books from an out-of-state company which, in turn, it will sell to its customers located both inside and outside this state. These coupon books contain 22 certificates entitling the holder to obtain $10.00 worth of coupons (based on the sum of the face values of the coupons) per certificate from the out-of-state company. The purchaser of the coupon book lists 35 different coupon selections on a certificate and mails it to the out-of-state company together with $1.00 for shipping and handling.

Under these facts, the taxpayer is regarded as selling nontaxable rights to receive coupons from the out-of-state company. The actual certificates are a record of the right to receive specified coupons from the out-of-state company and do not constitute the sale of tangible personal property. The taxpayer and its customers' use of these coupon certificate books is regarded as the use of intangible property. Thus, no tax applies to the sale or use of the grocery coupon certificate books inside this state. 10/18/95.