200809159L



September 12, 2008

Dear Retailer:

As you may know, television stations will broadcast in digital format only 
beginning Feb. 18, 2009.  This means some customers with analog televisions 
will need to purchase a converter box to view television programs.  Coupons to 
reduce the cost of the converter box are available from the Digital-to-Analog 
Converter Box Coupon program of the U.S. Department of Commerce.    

The U.S. Department of Commerce’s National Telecommunications and Information 
Administration is administering the Digital-to-Analog Converter Box Coupon 
Program as authorized in the Digital Television Transition and Public Safety 
Act of 2005. Between Jan. 1, 2008, and March 31, 2009, eligible U.S. households 
can request up to two coupons, worth $40 each, to be used towards the purchase 
of up to two converter boxes. Information regarding the program may be viewed 
at www.ntiadtv.gov. We would like to take this opportunity to remind retailers 
of the proper method for calculating the amount of Texas sales tax due when the 
purchaser presents a coupon. 

When a retailer sells a taxable item for a set amount and accepts a coupon for 
a specified amount, then the retailer should collect Texas state sales tax and 
applicable local sales taxes on the sales price of the item after deducting the 
coupon amount. This treatment applies to all coupons, including but not limited 
to product coupons, store coupons or government-issued coupons, such as the 
Digital-to-Analog Converter Box Coupon.  

Therefore, when a converter box coupon is presented by the purchaser to the 
seller at the time of sale, it reduces the sales price of the converter box by 
$40. As a result, the taxable amount is reduced by $40. For example, if the 
price of a converter box is $49.99, the $40 coupon will reduce the taxable 
amount to $9.99.

For more information, please see Comptroller Rule  3.301, Promotional Plans, 
Coupons, Retailer Reimbursement. The rule is available on our Web site at 
www.window.state.tx.us/taxinfo/sales/. 

We hope this information is helpful. If you have any questions concerning this 
provision or your tax collection responsibilities, please e-mail us at 
tax.help@cpa.state.tx.us or call toll free at
(800) 252-5555, or in Austin at (512) 463-4600.

Sincerely, 


Bryant Lomax
Manager, Tax Policy Division



ACCESSION NUMBER: 200809159L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 09/12/2008
TAX TYPE: SALES