Tax Charged on Free Item (using coupon)

[ksoup]

I have searched and cannot find this issue.

we have a coupon for a free item, and a tax zone. the customers in the tax zone are getting charged the correct tax, except the item is free.

is there a way to correct this or a setting i am missing?

[psychlone]

I have searched and cannot find this issue.

we have a coupon for a free item, and a tax zone. the customers in the tax zone are getting charged the correct tax, except the item is free.

is there a way to correct this or a setting i am missing?

Sorry, I do not know know how you can changes this, however you may want to think about keeping it this way.

In the state of New York, you have to collect tax on a product even if the product itself is free. For example if you recieve a Manufacturer coupong for a free CD Wallet, and use it in a store, the cashier will ring up the sale, (tax is added here), the value of the coupon is the actual price of the CD Wallet "before tax". The manufacturer reimburses the retail outlet the value of the coupon, but they still have to charge sales tax on the price of the CD Wallet to stay withing NYS Dept of Taxation and Finance's Regulations.