Sunday, February 15, 2009

$176 A Month

In preparation for my limiting my spending on food during the month of April to the $176 alloted to a food stamp recipient I did a bit of research. What I really wanted to know was if you could use coupons with food stamps. Apparently you can. But this is what intrigued me, how you account for sales tax if someone purchases food with a combination of food stamps, coupons, and cash. I don't know how stores in New York can even begin to figure this stuff out.

Purchases Using Food Stamps, Cash and Coupons

When a customer uses food stamps, cash, and coupons to purchase food and beverages, you:

• first, apply any store coupon to reduce the purchase price of the item to which the store coupon relates;

• second, apply any manufacturer's coupon to the purchase price of the item to which it relates; where the item is taxable, collect tax on the value of the manufacturer’s coupon (that is, for example, a coupon encoded with mfg.);

• third, apply the food stamps to the remaining purchase price of any taxable, eligible items and then to the remaining purchase price of any exempt eligible items; and

• fourth, if the customer does not have enough food stamps to cover the entire bill, collect the tax on any remaining balance due on taxable items paid for with cash (or credit card).


A customer makes the following purchases in your food market (T next to an item indicates that the purchase of that item is subject to sales tax):

Bottled water T $ 3.56
Diet Soda T 3.89
Chips, other snacks 2.09
Fruit punch flavored drink T 5.00
Deli - cold sandwiches T 6.97
Canned vegetables 16.98
Fresh fruits and vegetables 9.02
Total purchases $47.51

The customer presents your cashier with a manufacturer’s coupon valued at $.50 toward the purchase of the diet soda and a coupon issued by your store valued at $1.00 toward the purchase of the deli products. The customer indicates that he will be paying with $10.00 in food stamps and the balance in cash. The amount of sales tax due on this transaction is calculated as follows.

This example assumes a 7% state and local sales tax rate.

Total purchases $47.51

Calculation of sales tax:

Bottled water T $ 3.56
Diet soda T 3.89
Fruit punch flavored drink T 5.00
Deli sandwiches T 6.97
Total taxable purchases 19.42
Less: store coupon  1.00
Balance $18.42
Less: manufacturer’s coupon  .50
Balance $17.92
Less: food stamps 10.00
Taxable purchases subject to sales tax $ 7.92
Plus: manufacturer’s coupon + .50
Total amount subject to sales tax $ 8.42
Sales tax due (7% x $8.42) .59
Total $48.10
Store coupon $1.00
Manufacturer’s coupon + .50 - 1.50

Amount due from customer $46.60

When accounting for this sale, you would remit sales tax based on the balance of taxable purchases after allowance for food stamps.

Thus, you would remit sales tax of $.59 (7% x $8.42) on the sale.

Clear as mud, if you ask me. Who writes these laws? And who thinks the above is a clear explanation of anything?

And why is someone on food stamps buying bottled water when New York's tap water is rated so highly?