Sales tax and manufacturer's "rebates/savings"

Factual Questions
1

I recently bought an item from CostCo’s website. The item was listed at $300, but included an “$80 manufacturer’s savings,” so the final price ends up being $220. Sort of. In the end, CostCo’s website charged me sales tax on the full $300, and then deducted the $80. It sure looks to me like I’m paying about $5 more in sales tax than I should be.

After a bit of Googling, I found this class action lawsuit against CostCo, accusing them of collecting excess sales taxes similar to the way I described. The interesting thing is that the specific issue in that lawsuit was sales for which CostCo didn’t actually receive any rebate/savings money from the manufacturer – IOW, the only money that changed hands was from the consumer to CostCo, and so the only sales tax that should have been paid was for the net amount of that sale.

I’m familiar with the old-school rebate in which you buy an item for X*(1+Y) dollars (where X is the sticker price and Y is the sales tax rate), and then mail some paperwork to the manufacturer and receive Z dollars back (where Z<X). You don’t get reimbursed for the sales tax you paid on those Z dollars. It’s stupid, but yeah, I get it, I paid x dollars when I bought it, so I pay sales tax on that amount, and the rebate is a separate issue. But what about the purchase I described in the first paragraph above, i.e. a transaction during which those Z dollars never move to/from the customer’s wallet in the first place? Am I really supposed to be paying sales tax on those Z dollars then? Does it really matter whether Z dollars moves from the manufacturer to the vendor?

2

You would have to look up the sales tax regulations from the specific state.

Having said that, the most common rule (and the one that California, where the law suit was filed, follows) is that if a third party reimburses the retailer (for example, a manufacturer’s cents off coupon), then the reimbursement is subject to sales tax. If the retailer is not reimbursed (for example, a store cents off coupon), then it is not subject to sales tax.

Ever shop at CVS? Some of the Extra Care Bucks (ECBs) that they hand out are deducted before sales tax and some after sales tax. It depends on whether the manufacturer is reimbursing them for the redeemed ECBs. The ECBs will have a notation on them if they are manufacturer coupon.

Similarly for Walgreens. Most of the coupons that appear in their weekly ad are store coupons and deducted before taxes. Most (not all) of the coupons in the monthly booklet they give out in the store are manufacturer coupons good only at Walgreens (the manufacturer reimburses Walgreens when one is scanned) and so are deducted after tax. (A quick way to tell the difference at Walgreens is that the manufacturer coupons will have “Cash value 1/100 cent” written on them.)

The manufacturer’s rebates are basically electronic (paperless) coupons or at least they are supposed to be. Obviously the class action law suit says they are cheating.