Taxability of Buy Downs
The taxability of buy downs varies from state to state. Some states require the sales tax to be calculated on the total price of the item as if the Coupon or Buy Down were not applied, while others require the sales tax to be calculated on the net price of the item, after the discount has been taken. To address this issue and accommodate users in either situation, there is a check box in the window so you can specify whether the buy down is taxable. Review the descriptions of each setting carefully to determine which setting is appropriate for your particular situation.
• Calculate the Buy Down Before Taxes: In this situation, the sales tax is net of the buy down amount. This happens when the buy down is calculated before the sales tax is calculated. When considering state sales tax regulations, you would use this option if your state requires you to collect sales tax based on the net price of the item. To achieve this result, select the Taxable check box.
• Calculate the Buy Down After Taxes: In this situation, sales tax is calculated on the total price of the item before the buy down amount is subtracted. When considering state sales tax regulations, you would use this option if your state requires you to collect sales tax based on the original total price of the item. To achieve this result, leave the Taxable check box unchecked.
Published date: 12/21/2020