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  Sales tax when manufacturer rebate is offered

Q. If the manufacturer offers a rebate on the product; do I subtract the rebate amount before calculating the tax?


A. Retailers must collect tax on the full sales price paid for which tangible personal property or taxable services are sold, even though the purchaser may later obtain a cash rebate from the manufacturer or other third party. The terms "sales price" and "gross receipts" are defined in Conn. Gen. Stat. §12-407(a)(8) and (9) to include "the total amount for which tangible personal property is sold . . . or the total amount for which any service rendered . . . or the total amount of payment or periodic payments for which tangible personal property is leased by a retailer . . . ." Because the initial purchase of the item and the honoring of a rebate claim by the manufacturer are two separate and distinct transactions, the rebate does not reduce the sales price paid for the item.

(Updated: 2015)

This answer is intended to provide general information concerning a frequently asked question about a current position, policy, or practice associated with the taxes administered by the Connecticut Department of Revenue Services.  It may include an informal interpretation of Connecticut tax law by the Department of Revenue Services (DRS).  However, it is not intended to serve as a legal ruling.

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