Matt Hedstrom was a featured speaker for the session "The Evolving Marketing Concepts For Selling Goods and Services And Their Treatment For Sales Tax Purposes" during this meeting sponsored by the American Bar Association. Names such as Groupon, LivingSocial, and Kickstarter have not only entered the public lexicon over the past few years, but have come to signify new types of transactions. They have, of course, drawn the attention of several states, which have reached varying conclusions as to how sales tax should apply to social media coupons and other emerging business models.
The tax treatment of social media coupons depends largely on how the state implements its definition of “sales price.” As a result, varying treatments of these types of transactions exist—even among the 21 states that have fully adopted the Streamlined Sales and Use Tax Agreement. This program covered the following topics.
- How most states define “sales price”
- The jurisdictions that exclude cash discounts from “sales price”
- How “sales price” is defined under the Streamlined Sales and Use Tax Agreement
- The distinctions between manufacturer’s coupons and vendor’s coupons
- The sales and use tax consequences of reimbursements and rebates
- The sales and use tax issues that arise from transactions involving the redemption of social media coupons, such as Groupon or LivingSocial
- The available state tax agency guidance addressing transactions involving social media coupons
- How new business models such as Kickstarter are likely to raise issues regarding sales and use tax compliance
May 12, 2012