Q. I bought a new TV at on Dec. 26, 2014. The set was reduced from $1,799 to $999. I was charged sales tax of $125.93 on the list price of $1,799 instead of one the sale price. I was sure this was a mistake, but when I went back to the store I was told they must charge tax on the list price. I’m 61 years old and I’m dumbfounded by this. I’ve never heard of anything like this before. Is this legit?
A. Sales tax can be a little tricky.
How it’s calculated on sale items depends on whether or not the lower price is technically a sale price or if it’s a manufacturer’s rebate.
If we’re talking a traditional sale price, the sales tax charged should be applied to the sale price and not the list price, said Christopher Santarelli, a spokesman for the state’s Treasury Department.
A manufacturer’s rebate is treated differently.
“Also of note from N.J.S.A. 54:32B-2(oo)(3), a manufacturer’s rebate is subject to New Jersey sales tax,” Santarelli said. “Sales tax is calculated on the full retail price before the rebate because the seller who accepts the rebate is reimbursed by a third party. When the rebate is used, sales tax is charged on the full regular price because that is the amount which the seller ultimately receives – in part from the customer, the balance from the manufacturer.”
If, instead, the seller is not being reimbursed for the value of the rebate, the situation will be treated like that of a discount in which tax should be charged on the discounted price of the item being purchased, he said.
Joseph Perone, another spokesman for Treasury, took it a step further with a hypothetical example of a $1,000 item that was purchased for $500 by a consumer.
It is the seller who is receiving the manufacturer’s rebate, not the consumer, he said. In this case, the consumer would pay $500 ($1,000 minus the $500 rebate) but he or she would still pay the sales tax on the full $1,000 list price, he said.
In your case, you’ll need to go back to your receipt or to the seller to see if you paid a sale price or benefited from a manufacturer’s rebate.
“Sales tax should be charged on the retail selling price if the television was discounted by the seller,” Perone said. “If, however, the reduction in price is the result of a manufacturer’s rebate, tax should be charged on the full retail price before the rebate is applied.”
If you want the state to take a look, you can send a copy of the receipt to the Regulatory Services Branch:
New Jersey Division of Taxation
PO Box 269
Trenton, NJ 08695-0269
Or, you may fax it to (609) 989-0113.
You can read more about the details of sales tax in New Jersey here.
Email your questions to moc.p1511336362leHye1511336362noMJN1511336362@ksA1511336362.