Publication ANJ–9 About New Jersey Taxes:
Coupons & Discounts
Rev. 12/17
Supermarket Club Cards
Often, supermarkets issue customers a store card that can be used to receive discounts on certain
items. Discounts obtained through such cards are treated the same as discounts with store coupons.
Thus, Sales Tax is due on the discounted amount.
Buy One Get One
If no coupon is required to obtain two taxable items for the price of one (or three for the price of two,
etc.), Sales Tax should be charged only on the amount that the customer actually pays. If a coupon
required, see
Seller Coupons
and
Manufacturer Coupons
above.
Example: Rick buys two paperback books, each book costing $4.95, on a “buy one, get one free”
offer. No coupon is required for the discount. The cost to Rick is $4.95 plus 33 cents Sales Tax
(6.625% of $4.95).
Early Payment (Term) Discounts
Sellers often offer their customers a discount for early payment. For example, the term “2/10, net/30”
means that the purchaser may take a 2% discount off the selling price if payment is made within 10
days, but no discount is allowed thereafter and the full invoice amount is due within 30 days. Sales Tax
is charged on the discounted price if the customer chooses to take advantage of the discount.
Trade-Ins
A trade-in is a discount that occurs when a customer gives the retailer a used item that the retailer will
hold for sale in exchange for credit against the purchase of a new product of the same kind. In
transactions that include a trade-in, Sales Tax is charged on the net purchase price, which is the price
to the customer
after
the
amount of the trade-in allowance has been deducted from the regular selling
price.
Example: An automobile dealer allows a customer an $800 trade-in allowance against the purchase
price of a used car. The sales invoice would look something like this:
Sales Tax is not charged on the full price in this case because the seller will collect the balance of tax
later, when the traded-in item is resold. NOTE: The law permits this discount only when the item taken
in trade is of the same kind as the one being purchased and the retailer intends to resell it. The dealer
Trade-in allowance
Taxable receipt
6.625% Sales Tax
- 800.00
$ 8,100.00
+ 536.63