BigFlyer

Does anyone know who is funding the cash rebates - Bing, the merchant, or a combination?

I am asking because under California sales tax law, if a discount is funded by the retailer rather than a third party, sales tax is only due on the discounted price.

cepheid

Chances are that Bing works just like any other rebate portal, which means Bing is funding it after being paid a commission by the merchant. Therefore, it's effectively a third party.

That applies to sales, not to rebates - even if the rebates are so-called "instant" rebates. If you use a coupon or there is an instant rebate in place (both are paid by the manufacturer, not the retailer), you must pay sales tax on the full price. The same applies to non-instant (e.g. mail-in) rebates. Every such offer I've ever seen even specifies, "Sales tax must be paid on the original pre-discount price," or something to that effect.

Bing cashback is effectively a mail-in rebate, and it's most certainly paid by a third party, which is Bing (aka Microsoft).

BigFlyer

The two responses bot assume that the rebate is paid by Bing, but no one cites a source.

If it is paid by Bing and not the merchant, then why does the amount of the rebate vary from merchant to merchant?

cepheid

See Bing's FAQ, in particular: "The search advertising fees from participating stores are passed on to you." Bing earns a commission from the store, then shares that commission with you. However, it's actually irrelevant whether the rebate is paid by Bing or by the merchant - see below.

Because different merchants pay different commissions. It works exactly the same way for all rebate portals, e.g. Ebates, uPromise, FatWallet, etc.

However, this is still a moot argument. Even if the cashback were paid by the merchant, you would still have to pay sales tax on the full price. As I mentioned previously, the sales tax is based on the price paid at purchase, excluding coupons. Mail-in rebates or any other post-purchase rebate, even if offered by the merchant, do not qualify to reduce the purchase price, and hence do not qualify to reduce the sales tax. Bing cashback is a post-purchase rebate, not an at-purchase discount, and hence would not qualify to reduce your sales tax liability. Furthermore, even coupons used at time of purchase, even if offered by the merchant, do not reduce the sales tax (see Costco as a prime example of this - they don't offer manufacturer coupons, but only store coupons, yet the coupons do not reduce the sales tax liability.)

So for all of these reasons, you are still liable for the sales tax on the full purchase price paid to the merchant at time of purchase.

BigFlyer

I don't think the rule is as clear as you make it out to be, and, at least in the case of store coupons, you are wrong and the sales tax is on the price paid after the application of the coupon:

The following is from page 2 of http://www.boe.ca.gov/pdf/pub113.pdf ;

Retailer coupons

You may issue retailer coupons in paper or paperless form. When presented to you by your customers, these coupons allow your customers to buy products at a certain amount or percentage off the regular selling price. Retailer coupons do not result in compensation from a third party and are excluded from your total taxable sales unless your customer has previously given you compensation for the coupon.

cepheid

If you already believe you know the answer, why post here? With regards to post-purchase rebates, the regulation is actually quite clear: post-purchase rebates issued directly to the customer are not part of the taxable sales.

However, are you asking from a retailer standpoint or from a consumer standpoint? They are not the same thing, and the document to which you linked (and regulation linked therein) applies to stores collecting tax, not to the tax liability of the consumer. If you are wondering whether you should receive a sales tax rebate from the retailer or the state, that is not the same as asking whether those rebates do or don't count as taxable sales to the retailer, which is the only thing that the document addresses.

If you're asking from a consumer standpoint, then IMHO, no, you are not owed a refund on your sales tax. The sales tax is computed based on the price at purchase, irrespective of mail-in rebates, and furthermore the rebate is paid by a third party. If you want an answer that you consider more reliable, I would suggest that you contact a tax attorney or accountant, as they are the only people legally qualified to provide such legal advice.

It would appear that this depends on how the coupon is labeled; Costco coupons are labeled as manufacturer coupons even though they are usable only at Costco, and hence they are taxable.

BigFlyer

While I am happy to have everyone's opinion, I didn't ask about the legal issues of sales tax liability. I asked who was funding the cashback, and said that the reason I was asking was because it might have an effect on sales tax issues.

But, if we are going to discuss the law.....

I don't think the publication addresses the issue directly of a rebate paid for by the merchant (I understand that if it is funded fully by Bing there is no issue.) With respect to coupons, if it is funded by the merchant, when the publication says that they do not need to collect or pay tax that means that the consumer doesn't pay tax either. They go together.

None of the examples in the publication deal with a situation where the rebate is funded by the merchant, not a third party. However, in the case of a coupon, whether or not tax is due hinges on whether the discount is from the merchant or funded by a third party. I don't think that anyone can say conclusively that the same would not apply to a rebate.

BTW, you mentioned Costco. I have bought things in their Bay Area stores with an instant rebate. While the sign always says sales tax on the full price, in practice I have found that the tax is funded on the amount after the deduction of the instant rebate.

cepheid

That sounds like you're asking about the legality of whether or not sales tax needs to be collected on the pre- or post-rebate price, in preparation for an argument with either the merchant or the FTB. That's how it sounds to me, anyway.

Regardless, in this case, the cashback is funded by Bing. It is entirely up to Bing whether to provide cashback, what rates of cashback they set, etc., and it is funded through their profits from advertising/commissions. (They will be canceling their program effective at the end of this month, anyway.)

Well, perhaps not, but I've submitted for mail-in rebates from merchants (e.g. Best Buy, CompUSA, etc.) and in all cases had to pay sales tax on the pre-rebate price. Granted, it's very possible those rebates were funded by the manufacturer and just passed through the merchant, so yes, those situations are not conclusive one way or the other.

cfischer

drugstore.com is back @ 30%

divemistressofthedark

Get those deals while you can, folks. Bing will be discontinued July 31, 2010:

http://www.elistmania.com/news/micro...bing_cashback/

"Due to lack of interest." I find that hard to believe.

tkey75

endless.com is still 30% CB. Awesome, awesome shoe selection. Got $260 backpacking boots for $110 after sale and CB. Search for cheap oakleys (yeah, good sunglasses selection, too).

ALadyNCal

BTW, it's the 30th of July.
http://www.bing.com/shopping?FORM=Z9LH7

Any guesses as to whether the last day or two will have inflated cashback? I'd LOVE the eBay 8% to go back to 15% for a day

Helena Handbaskets

Due to lack of interest on the part of Microsoft in continuing to pay people to use their search engine.

cfischer

I'll be checking tomorrow, but it looks like things are winding down aleady. Most of the codeword searches return nothing

ALadyNCal

I see the same percentages I've seen the last several days. eBay is still @ 8%, for example.

http://www.bing.com/shopping/pages/stores.aspx