34 Tex. Admin. Code § 3.301 - Promotional Plans, Coupons, Retailer Reimbursement
(a) Trading stamps.
(1) The sale of trading stamps to a retailer
is a sale of intangible personal property and not taxable under the Limited
Sales, Excise, and Use Tax Act. The sale to a retailer of catalogues, stamp
books, advertising, or printed matter, or other tangible personal property used
in connection with the conduct or promotion of his business is a sale of
tangible personal property and subjects such retailer to liability for the
sales or use tax, which tax must be collected and remitted in accordance with
the terms of the Limited Sales, Excise, and Use Tax Act. When a retailer
distributes trading stamps to customers along with the sale of merchandise,
such stamps are considered to be given in addition to the merchandise, unless
the terms of the sale reveal an intention that a part of the consideration is
for the stamps.
(2) The redemption
of trading stamps by exchanging merchandise for them is a sale at retail of
merchandise for a consideration. Trading stamp companies selling tangible
personal property or redeeming trading stamps by exchanging merchandise for
them or both are retailers. Trading stamp companies or other retailers so
redeeming trading stamps must collect and remit to the state sales tax based on
the redemptive value of the stamps surrendered or on the reasonable retail
price of the taxable merchandise utilized in the transaction, whichever is the
larger.
(b) Games and
concessions dispensing merchandise.
(1) The
operators of games, grab-bag concessions, or other operations similar in
nature, in which each customer receives some merchandise or prize are regarded
as retailers and must collect and remit to the State of Texas the sales tax;
sales to these operators are sales for resale. Tax on the sales of such
merchandise or prizes is due on the gross receipts from such operations, and a
reimbursement tax shall be collected from their customers. If an operator
disposes of both taxable and nontaxable items, his tax to the State of Texas
will be measured by the percentage of his taxable sales to his total sales, but
not less than the reimbursement taxes collected from his customers. Such
operators may give their suppliers resale certificates for taxable items
purchased.
(2) The operators of
games, or other concessions, in which each participant does not receive some
merchandise or prize, become the consumers of merchandise so used by them and
are liable to the State of Texas for tax based on the sales price or use of the
taxable items purchased for use by them. Retailers selling taxable tangible
personal property to such operators or concessionaires shall collect and remit
to the state the tax due on the sales to them. The Texas use tax is due on
out-of-state purchases of taxable tangible personal property based on the
purchase price of the merchandise.
(c) Gifts, samples, prizes, premiums.
(1) Sales of taxable tangible personal
property to persons who make gifts of the property or use the property for
samples or advertising purposes are taxable. For an explanation of the
taxability of an item purchased for use as a prize when the winning of the
prizes depends upon chance or skill, see §
3.298(f) (1) of
this title (relating to Amusement Services).
(2) Sales of taxable items to persons who
give the property as a premium with bona fide sales of other taxable items are
not sales for resale where no additional charge is made for such premiums.
However, when a taxable item is given as a premium with an additional charge
being made therefor, the premium is purchased for resale and sales tax should
be collected on such additional charge. This does not apply to transactions in
which trading stamps are used.
(d) Cash discounts. The actual selling price
of taxable tangible personal property is the measure of the tax due under the
terms of the Limited Sales, Excise, and Use Tax Act. Bona fide cash discounts
taken by the buyer at the time of the sale pose no problem, as they are never a
part of the sales price and are never in the tax base. However, if cash
discounts are taken after the amount of the sales have been used in the measure
of the tax, such cash discounts may be deducted from the measure of tax
liability for the reporting period in which such discounts are taken in which
instance the retailer seeking an adjustment in his tax liability must show he
has adjusted pro rata the reimbursement tax collected, if any, from his
purchasers. Cash discounts so taken and becoming the basis of a tax adjustment
between retailers, their purchasers, and/or the State of Texas, must be
substantiated in the accounts, invoices, and records of such retailers to the
satisfaction of the comptroller's office.
(e) Coupons. When coupons or certificates are
accepted by retailers as a part of the selling price of any taxable item, the
value of the coupon or certificate is excludable from the tax as a cash
discount, regardless of whether the retailer is reimbursed for the amount
represented by the coupons or certificate.
Notes
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