Bill > S1689

Introduced Session

This bill excludes the value of certain manufacturer rebates from the sales price of motor vehicles taxable under the sales and use tax. A manufacturer rebate is an amount paid by the manufacturer to the customer for buying a product. Typically, a customer pays the full price to a retailer and uses some "proof of purchase" to obtain a rebate from the manufacturer. Although the later rebate payment reduces the customer's total outlay for the product, the rebate does not reduce the actual payment that the customer made to the retailer, so a rebate does not reduce the amount of the actual sales price or the amount of sales tax due on a sale. This can become very confusing for the customer in certain motor vehicle purchases involving manufacturers' rebates in which the car dealer allows the customer to apply the rebate to the purchase at the time of the sale. In these sales the customer turns over the rights to the rebate to the dealer (who later collects it). Because the application of the rebate reduces the amount of the customer's outlay to the dealer, it appears to the customer that the customer has been provided a discount on the dealer's sale price, and expects to pay sales tax on the discounted price. However, under current law the customer and the manufacturer have together paid the full sale price, and the customer owes sales tax on that full price: the customer's outlay plus the rebate amount. This bill provides a special rule for manufacturer rebates in motor vehicle sales. Under the bill, if the rebate is a cash payment granted as a true manufacturer rebate (and not a credit acquired under a credit or financing plan) and the rebate is used at the time of the retail sale to reduce the sale price of the motor vehicle (and not provided later), then the amount of the rebate is not counted as part of the "sales price" on which sales tax liability is calculated.

Committee Categories

Christopher Connors (R)*, 

Introduced in the Senate, Referred to Senate Commerce Committee (on 02/13/2020)

Official Document