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Do customers pay sales tax on free items?

Joel Holland -

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When a customer has earned enough points to redeem a perk, they do not pay sales tax on the price of the free item. During a transaction, the item is discounted before sales tax is applied.

  • If the total (after redeeming the perk) is $0.00, the customer does not pay anything.
  • If the customer redeems the perk and buys an additional item, they pay sales tax on the final cost. 

 

Examples:

  • A customer redeems a "free coffee" and buys a bagel. The sales tax is applied only to the cost of the bagel.
  • A customer redeems a "10% off" perk. They would pay sales tax on the total after the 10% is discounted.

 

Note: Perka members earn points based on the purchase, excluding sales tax. Clover Rewards rounds up to the next dollar amount. So a purchase of $11.38 (pre-tax) will give a customer 12 points.

 

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