Did manufacturer reimbursement for coupons published by a retailer belong in the retailer's California gross receipts?

Plain-English summary

A manufacturer authorized a retailer to publish coupons for the manufacturer's product in newspaper or handbill advertising. The manufacturer promised to pay the retailer 14 cents plus a 3-cent handling amount for each redeemed coupon, even if the retailer advertised a larger discount.

The memorandum treated the manufacturer's 14-cent reimbursement like payment under a manufacturer-published coupon and included it in the retailer's gross receipts. The separate handling payment was excluded from that result.

Citations and references

• The official memorandum cites no statute, regulation, case, or prior ruling by number.
• Attached manufacturer-retailer agreement authorizing retailer-published consumer coupons and fixing reimbursement and handling payments — date, parties, complete terms, and attachment copy not included in the official PDF despite its closing “Attachment” notation
• Prior Board treatment of coupons published by manufacturers, under which manufacturer payments other than handling were part of retailer gross receipts — described but no ruling, memorandum, annotation, or other authority identified or reproduced in the official PDF
• Fourteen-cent minimum customer discount, fourteen-cent manufacturer reimbursement, separate three-cent handling payment, and possible twenty-four-cent retailer coupon — agreement terms and example quoted; agreement, advertisements, coupons, redemption records, invoices, and payments not reproduced in the official PDF
• Official Annotation 295.0430's manufacturer-retailer agreement, newspaper and handbill coupons, customer product purchases, reimbursement, gross-receipts conclusion, and May 9, 1973 date — annotation omits the fourteen-cent and three-cent amounts, separate handling-payment exclusion, twenty-four-cent example, unidentified prior treatment, missing attachment and records, and later outcome and supplies no additional agreement or redemption record
• Possible coupon publication, customer purchase, redemption, reimbursement, handling payment, return filing, audit, assessment, refund claim, appeal, or other later agency action — not supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/295-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/295-0430.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
295.0430

To:

Mr. Robert Nunes

From:

T. P. Putnam

Subject:

House Coupons

Date:

May 9, 1973

You have asked whether amounts paid by a manufacturer to a retailer of the manufacturer’s product under the provisions of the attached agreement are includable in the retailer’s gross receipts. The pertinent provisions of the agreement are that the manufacturere authorizes the retailer to publish a “consumer coupon” in a newspaper or handbill advertisement, offering the bearer of the coupon a minimum of 14 cents off the regular price of the product. The manufacturer agrees to pay the retailer at the rate of 14 cents plus 3 cents handling cost for each coupon redeemed by the retailer. The retailer may, for example, publish a coupon designated as a 24 cent coupon. Upon redemption, the manufacturer will pay the retailer 14 cents plus a 3 cent handling charge. In my opinion, these coupons fall in the same category as those published by the manufacturer. In those cases, we regard the amount paid by the manufacturer to the retailer, exclusive of payment for handling, as part of the retailer’s gross receipts. The same result should follow here, i.e., the payment of 14 cents by the manufacturer to the retailer in redemption of the coupon published by the retailer should be included in the retailer’s gross receipts.

TPP:lb
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