Was a tourist-coupon promoter taxed on distributor receipts or on the cost of printing the coupons?

Plain-English summary

A promoter planned to have tourist discount coupons printed and sell them to distributors for $4.80 each. Distributors would resell them for $5.00, purchasers could redeem them for $5.60 of meals or amusement admissions, and the promoter would redeem each coupon for $4.40.

The letter treated the promoter as the consumer of the printed coupons. Sales or use tax therefore applied to what the promoter paid for the coupons.

It found no further tax due on the amounts the promoter received from distributors. The letter did not separately decide the tax treatment of the meals or amusement admissions purchased with the coupons.

Citations and references

• The source letter cites no statute or regulation by number.
• August 25, 1966 request — proposed plan summarized; letter and attachments not reproduced in the official PDF
• $4.80 distributor price, $5.00 consumer price, $5.60 meal or admission value, $4.40 promoter redemption, and printed-coupon cost — amounts and plan supplied; coupon, printer agreement and invoice, distributor agreement and sales, restaurant and attraction agreements, redemptions, payments, and accounting records not reproduced in the official PDF
• Official Annotation 280.0380's promoter contracts, printer purchase, distributor sale, coupon use and return, $5.60/$4.80/$4.40 amounts, promoter-consumer status, and fabricated-cost measure — annotation changes the PDF's purchaser-and-redemption sequence and supplies no additional plan or implementation record
• Possible later coupon printing, distribution, sale, redemption, return filing, audit, assessment, payment, refund claim, appeal, or other agency action — not supplied in the official PDF

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 280.0380
• Original supporting opinion: 280.0380 PDF

Original ruling text

280.0380

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 31, 1966

Dear
This is in reply to your letter of August 25, 1966.
It is our understanding that you are creating a sales promotion plan involving Tourist Discount Coupons. You will have the coupons printed; then, you will sell them to distributors for $4.80. They, in turn, will sell the coupons for $5.00, and the purchasers will use the coupons to purchase $5.60 in meals or amusement admissions from restaurants and tourist attractions. You will redeem the coupons for $4.40. Under the foregoing, it appears to us that you Hill be the consumer of the printed coupons; therefore, the sales, or use tax will apply to your cost of the coupons. No further tax will be due with respect to the amounts you receive from the distributors.

Very truly yours,

George A. Trigueros
Associate Tax Counsel

GAT:em
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San Francisco District Administrator