Alabama Cash Discount

 

810-6-1-.53. Cash Discounts

Cash discounts when allowed and taken are not to be included in gross proceeds of sales. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

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Sections 40-23-1

(6) GROSS PROCEEDS OF SALES. The value proceeding or accruing from the sale of tangible personal property, and including the proceeds from the sale of any property handled on consignment by the taxpayer, including merchandise of any kind and character without any deduction on account of the cost of the property sold, the cost of the materials used, labor or service cost, interest paid, any consumer excise taxes that may be included within the sales price of the property sold, or any other expenses whatsoever, and without any deductions on account of losses; provided, that cash discounts allowed and taken on sales shall not be included, and "gross proceeds of sales" shall not include the sale price of property returned by customers when the full sales price thereof is refunded either in cash or by credit. The term "gross proceeds of sale" shall also mean and include the reasonable and fair market value of any tangible personal property previously purchased at wholesale which is withdrawn or used from the business or stock and used or consumed in connection with a business, and shall also mean and include the reasonable and fair market value of any tangible personal property previously purchased at wholesale which is withdrawn from the business or stock and used or consumed by any person so withdrawing the same, except property which has been previously withdrawn from business or stock and so used or consumed with respect to which property the tax has been paid because of previous withdrawal, use, or consumption, except property which enters into and becomes an ingredient or component part of tangible personal property or products manufactured or compounded for sale and not for the personal and private use or consumption of any person so withdrawing, using, or consuming the same, and except refinery, residue, or fuel gas, whether in a liquid or gaseous state, that has been generated by, or is otherwise a by-product of, a petroleum-refining process, which gas is then utilized in the process to generate heat or is otherwise utilized in the distillation or refining of petroleum products.

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Federal Legislation

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“EFTA Sections 920(b)(2) and (3) impose certain limits on the ability of payment card networks to restrict merchants and other persons in establishing the terms and conditions under which they may accept payment cards. Specifically, EFTA Section 920(b)(2) prohibits a payment card network from establishing rules that prevent merchants from offering discounts or in-kind incentives based on the method of payment tendered to the extent that such discounts or incentives do not differentiate on the basis of the issuer or payment card network”. -Federal Registrar, Volume 76, No. 139, July 20, 2011.

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Part II Federal Reserve System 12 CFR Part 235 Debit Card Interchange Fees and Routing; Final Rule Caveats: “a discount for use of debit or credit cards does not discriminate on the basis of the issuer or network and any discount insofar as required by other applicable law is offered to all customers and is conspicuously disclosed and prohibits networks for penalizing retailers for providing discounts that are permitted by federal and state law”

Further Reading: “Section 920 of the EFTA also addresses discounts at the point of sale and transaction minimums. Specifically, section 920 prohibits networks from inhibiting the ability of merchants to provide discounts or in-kind incentives for payments by cash, check, debit card, or credit card”. -Board of Governors for the Central Reserve System, Compliance Guide to Small Entities, Regulation II: Debit Card Interchange Fees and Routing 12 CFR 235 “Discounts to Customers. A PCN cannot stop you from offering your customers a discount or another incentive for using a certain method of payment, as long as you offer it to all your customers and disclose the offer clearly and conspicuously. For example, you can offer your customers a discount or a coupon if they pay with cash or a debit card rather than a credit card”. -Federal Trade Commission Facts for Business, New Rules on Electronic Payments Lower Costs for Retailers