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Taxes and Tax Preparation
Sales Tax

If the price of a 21 pair of jeans is reduced by one-third how much tax must be paid on the jeans in a state that has 3 sales tax?


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May 31, 2007 5:14PM

If the item is taxable (and clothing in many places isn't), the discount is normally handled like this: If it provided by the retailer...the one your buying it in $21 jeans on sale for $15 - the tax is on the sale amount of $15. If it is actually provided by the manufacturer... as in $21 jeans with manufacturer rebate now $15 - the tax is on the entire $21. (The manufacturer is paying the retailer the additional $6 for you....but the sale is really a $21 sale. Just apply the tax rate to the correct sales price (agreeably there may be some rounding for a 1c or so).