SD – Selling Online Discount Coupons

Various on-line businesses provide websites for businesses to sell coupons or certificates
at reduced prices. The retailer contracts with an on-line advertiser to sell vouchers redeemable at the retailer’s business. The retailer will owe sales tax on the amount paid for the voucher when the voucher is redeemed. Sales tax is not due at the time the coupon or certificate is purchased.

Example: A restaurant sells a $50 voucher for $30 through the on-line company. The customer uses the voucher to purchase goods worth $50.

• The restaurant owes sales tax on $30 when the voucher is redeemed.
• Fees the on-line company retains for their services are not subject to sales or use tax. The restaurant may not deduct the amounts retained by the on-line company from the sales price of the voucher.

From: http://www.state.sd.us/drr2/businesstax/publications/newsletter/2011/july.pdf