Nebraska Cash Discount

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Title 316, Chapter 1 – Sales and Use Tax - REG-1-024, Cash Discounts

024.01 Discounts allowed by the retailer to customers are deductible in arriving at the net sales price which is taxable. Such discounts must appear on the invoices, records and accounts of the retailer and be substantiated to the satisfaction of the Department of Revenue.

A discount is not a proper deduction from gross receipts when given on the sale of property or services which are exempt from the tax. 024.02 A cash discount is usually offered by the seller as an inducement for payment within a specified time. A volume discount is usually offered as an inducement for larger purchases. These discounts may not be deducted by the seller until it has been given to the purchaser. Such discounts will be allowed as a deduction on the seller's tax return when there is sufficient evidence in the records of the seller to indicate that such discounts have been given to the purchaser and the sales reported on the tax return are the amount of sales before discounts.

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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