The Pennsylvania Supreme Court held that a taxpayer was not eligible for a sales tax refund on purchases made using coupons because the receipts did not sufficiently describe the coupons, and did not clearly indicate which item(s) the coupon discounted. Where a consumer uses a coupon, Pennsylvania sales tax is generally not due on discount amounts. In this case, the taxpayer engaged in three separate transactions using coupons. In the first transaction, the taxpayer purchased six items using five coupons of varying amounts, and none of the coupons related to a specific item. In the two remaining transactions, the taxpayer purchased a single item and used one coupon. The coupons appeared as “SCANNED COUP” on each of the three transactions’ receipts. Sales tax was imposed on the total purchase price before the coupon discounts were applied. The taxpayer sought a refund, contending that sales tax was only due on the post-discount price.
Reversing the Commonwealth Court, the Pennsylvania Supreme Court concluded that the coupons used in the transactions were taxable because they did not meet the specific requirements the Pennsylvania regulation, 61 Pa. Code § 33.2(b)(2), prescribes for excluding discounts from the sales tax base. The court explained that sales tax should be imposed on the full purchase price unless (1) the amount of the item and coupon are separately stated and identified, and (2) both the item and the coupon are described in the invoice or receipt. The court found that while the coupons were separately stated and identified as coupons in each of the receipts, the coupons were not sufficiently described. Without a proper description, the court explained, it is impossible to determine whether the coupons utilized were of the type that would establish a new purchase price. Thus, the court ruled that the taxpayer was not entitled to a refund of sales tax on the amount of the coupons.