Per the lawsuit filing (and as mentioned by doreen in post #12), if the retailer informs the customer that there is a rebate, then the customer is liable for the tax (which is collected by the retailer, as always), but if the retailer does not inform the customer about the rebate but simply lowers the price on that basis, then the retailer is liable for the tax.
Any discussion of whether it makes sense for one guy to pay tax on another guy’s payment seems moot if that is in fact the law. NYS can do whatever they want in this regard, whether it makes sense or not.
So if the wholesaler or manufacturer gives the retailer a discount on the price they should pay sales tax? “Here, we charged you $100 more than we intended for the widget, so here’s a cheque for $100 plus sales tax to remit to the state.”
What if it’s after the fact? “Tell us how many you sold this month and we’ll send you $100 for each one…”
It all depends on whether you see this as the manufacturer giving a price break on wholesale to the seller, or helping pay full price for the consumer. I suppose if you happen to be the guy collecting sales tax, the one with the bigger tax is all you see.