Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
555.0000 TRADING STAMPS AND RELATED PROMOTIONAL PLANS—Regulation 1671
555.0015 Cash Register Receipts Promotion. A grocery retailer has a program where by schools or various organizations can obtain computer products by accumulating the grocer's cash register receipts. The accumulated receipts are deposited with a third party servicing vendor who issues periodic statements of account balance (accumulated tape value) to the school. When the required tape value is reached, the grocer places a purchase order with an out-of-state vendor who ships the product directly to the school and invoices the grocer.
This plan is distinguishable from that described in Regulation 1671. Second, the school is not obligated to promote shopping at the grocery store as a condition of receiving computer products. The program is promoted by asking its students and P. T. A. members to collect the sales slips from their grocery purchases and turn them over to the school rather than throw them away.
Under the above scenario, the computer products are considered to be a donation by the grocer to the school. Also, since the supplies and the property are located out of state, the donation (use) occurs outside of California and is not subject to tax. 4/9/91.