          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


John G. Myers,                           :
                    Petitioner           :
                                         :
            v.                           :
                                         :
Commonwealth of Pennsylvania,            :   No. 274 F.R. 2016
                Respondent               :
                                         :
Cecelia A. Reihl,                        :
                    Petitioner           :
                                         :
            v.                           :
                                         :
Commonwealth of Pennsylvania,            :   No. 275 F.R. 2016
                Respondent               :   Argued: November 12, 2019


BEFORE:     HONORABLE MARY HANNAH LEAVITT, President Judge
            HONORABLE CHRISTINE FIZZANO CANNON, Judge
            HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge


OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE FIZZANO CANNON                      FILED: May 11, 2020


            John G. Myers (Myers) and Cecelia A. Reihl (Reihl) (collectively,
Taxpayers) petition this Court seeking review of the orders of the Board of Finance
and Revenue (Board) each dated March 30, 2016 denying their requests for refunds
of sales tax paid on purchases in transactions using coupons at BJ’s Wholesale Club,
Inc. (BJ’s). The Board denied Taxpayers’ petitions because BJ’s acceptance of the
coupons did not establish a new purchase price which would entitle Taxpayers to a
reduction in sales tax and a refund pursuant to the Tax Reform Code of 1971 (Tax
Code).1 Upon review, we reverse the Board’s order relating to Taxpayer Myers’
transactions and affirm the Board’s order relating to Taxpayer Reihl’s transaction.
               The parties stipulated to the following facts.2 On June 24, 2015,
Taxpayers filed petitions with the Pennsylvania Department of Revenue’s (Revenue)
Board of Appeals (BOA) requesting refunds of sales tax paid on purchases made at
BJ’s with coupons. Stipulations of Fact (Stip.) ¶ 5, Exhibits (Ex.) P & Q. Taxpayers
made purchases of “tangible personal property” at a BJ’s location in Downingtown,
Pennsylvania, using coupons on June 25, 2012, June 13, 2013, August 22, 2014, and
August 25, 2014. Stip. ¶¶ 15-18. Taxpayers asserted that they paid sales tax on the
full purchase price of the tangible personal property, rather than the reduced priced
resulting from presentation of the coupons, and sought a refund for excess sales tax
paid. Stip. Ex. P Petition ¶ 6 & Ex. Q Petition ¶ 6. Taxpayer Reihl sought a refund
of 12 cents for the sales tax paid to complete the June 25th transaction, Stip. ¶ 15c,
and Taxpayer Myers sought a refund of 14 cents, 18 cents and 6 cents (totaling 38
cents) for the sales tax paid to complete the June 13th, August 22nd, and August
25th transactions, respectively. Id. ¶¶ 16c, 17c & 18c.3 In support of their request,


       1
         Act of March 4, 1971, P.L. 6, as amended, 72 P.S. §§ 7101-10004. Several provisions of
the Tax Code were amended by the Act of June 28, 2019, P.L. 50, No. 13 effective July 1, 2019
but the amendments to the Tax Code have no bearing on the present matter.
       2
        The stipulation of facts is binding and conclusive upon this Court though we may draw
our own legal conclusions from those facts. Norris v. Commonwealth, 625 A.2d 179, 182 (Pa.
Cmwlth. 1993).
       3
          Additionally, before the BOA, Taxpayer Reihl sought a refund for sales tax paid to
complete a transaction on February 11, 2012. Stip. Ex. Q ¶ 12. Though Taxpayer Reihl mentioned
the February 11th transaction in the Petition for Review filed with this Court, Petition for Review
¶ 8, it is not included in the Stipulation of Facts prepared by the parties summarizing the
transactions at issue. See Stip. ¶¶ 15-18. Cooper v. Commonwealth, 700 A.2d 553, 554 (Pa.
Cmwlth. 1997) (explaining that the facts not included in the stipulation of facts are not facts of
record). Therefore, the February 11th transaction is not a transaction at issue before this Court.
                                                2
Taxpayers presented copies of the receipts from BJ’s, copies of coupons, and copies
of purchase history reports from BJ’s covering the period of January 1, 2010 through
July 17, 2012. Stip. Exs. P & Q.4
              After a hearing on the matter, BOA denied Taxpayers’ requests for
refunds concluding that the sales tax was due on the original full purchase price of
the items purchased. BOA Decision and Orders mailed 9/1/15 at 2; Stip. Exs. L &
M. In rendering its decision, BOA relied on a regulation promulgated by Revenue
at 61 Pa. Code § 33.2(b)(2) that allows amounts represented by coupons to establish
a reduced purchase price if “both the [taxable] item and the coupon are described on
the invoice or cash register tape.” Id. at 1. BOA explained that “per the receipts
presented, the coupons are not adequately described and there is nothing that
indicates to which item the coupon relates . . . .” Id. at 2. Therefore, BOA concluded
that acceptance of the coupons by BJ’s did not establish a new purchase price. Id.
              Taxpayers filed petitions for review with the Board seeking reversal of
BOA’s decisions. The Board denied Taxpayers’ petitions concluding that
Taxpayers failed to establish that Revenue’s regulation is “contrary” to the plain
language of the Tax Code and affirmed BOA’s conclusion that sales tax is due on
the original purchase price of the items purchased because the coupons were not
adequately described. Board Decision and Orders dated 3/30/16 at 4; Stip. Exs. N
& O. Taxpayers petitioned this Court for review of the Board’s decisions.5 By order



       4
         The purchase history reports are a summary of items purchased at BJ’s by member
number ending in “3339” between January 1, 2010 and July 17, 2012. Stip. Ex. P, Ex. 4 & Stip.
Ex. Q, Ex. 3.
       5
         This Court reviews de novo the determinations of the Board. Kelleher v. Commonwealth,
704 A.2d 729, 731 (Pa. Cmwlth. 1997). Although cases from the Board are addressed to our
appellate jurisdiction, we function as a trial court. Cooper, 700 A.2d at 554 n.1.
                                              3
dated June 16, 2016, this Court granted BJ’s petition to intervene in this matter.
Cmwlth. Order dated 6/16/16.
                                     Arguments
              Before this Court, Taxpayers contend that the Board erred by denying
their refund requests because Revenue’s regulation is unenforceable as it was
promulgated in violation of the plain language of Section 201(g)(1)-(2) of the Tax
Code, 72 P.S. § 7201(g)(1)-(2). Taxpayers’ Brief at 19-20. Taxpayers argue that
they presented coupons to BJ’s in exchange for taxable items, which entitled them
to a reduced purchase price based on the plain language of Section 201(g)(2) of the
Tax Code, which allows a deduction from the purchase price the value of any
tangible personal property taken in trade or in exchange of any part of the purchase
price. Id. at 15-18; 72 P.S. § 7201(g)(2).
              To support their argument, Taxpayers rely on the definition of “tangible
personal property” as “[c]orporeal personal property including, but not limited to,
goods, wares, merchandise. . . .” Section 201(m)(1) of the Tax Code, 72 P.S. §
7201(m). Corporeal personal property has a “physical material existence” and is
“tangible.”   Dechert LLP v. Commonwealth, 998 A.2d 575, 580 (Pa. 2010).
“Personal property” is “any movable or intangible thing that is subject to ownership
and not classified as real property.” Air-Serv Grp., LLP v. Commonwealth, 18 A.3d
448, 453 (Pa. Cmwlth. 2011). Relying on this precedent, Taxpayers assert that a
coupon is “tangible personal property,” because “[o]ne can hold a coupon; one can
possess it; one can trade it; it commonly has a value printed on its face in a fraction
of a cent; it has the kind of physical form one associates with corporeality and
tangibility; and it is not real property.” Taxpayers’ Brief at 17.



                                             4
             Taxpayers further argue that Revenue’s regulation is problematic
because it creates a requirement not present in Section 201(g)(1)-(2) of the Tax Code
that to receive a reduced purchase price, there must be a “detailed description of the
item and coupon” on the invoice or cash register tape created by the vendor during
the transaction. Taxpayers’ Brief at 20 (emphasis in original). By imposing this
description requirement, Taxpayers contend that the regulation denies them a benefit
to which they are entitled, that is, that sales tax be collected on the “discounted, post-
coupon price of each purchase” and allows vendors to overcharge sales tax on
Pennsylvania consumers. Id. at 19-21.
             Moreover, assuming that Revenue’s regulation is valid, Taxpayers
contend that they provided sufficient evidence of compliance with the description
requirement of the regulation. Taxpayers assert that BJ’s maintains purchase history
reports that contain information describing the coupons and items sufficiently to link
the two as required by the regulation. Taxpayers’ Brief at 22-23. Taxpayers contend
that the Board erred when it refused to consider the purchase history reports and
“instead” ruled that “because BJ’s purposely obscures this link on the actual register
tapes it would not enforce the law.” Id. at 11. Further, Taxpayers submit that they
presented evidence of two transactions that involved only one coupon and one
taxable item and, therefore, it is evident as to what item the coupon applied thereby
rendering it impossible not to comply with the description requirement. Id. at 24.
             The Commonwealth counters that Taxpayers failed to meet their
burden of demonstrating that Revenue’s regulation is “clearly inconsistent” with
Section 201(g)(1)-(2) of the Tax Code. Commonwealth’s Brief at 32-33. The
Commonwealth argues that Revenue’s regulation was promulgated pursuant to
Revenue’s enforcement authority provided in the Tax Code and Revenue is entitled


                                            5
to deference in its interpretation of the Tax Code. Id. The Commonwealth explains
that the regulation addresses how coupons affect the purchase price of taxable items
and provides that coupons may establish a reduced purchase price if Taxpayers
present the evidence required by the regulation. Id. at 19-20. The Commonwealth
asserts that Taxpayers “elected to rely exclusively on the receipts attached to the
parties’ stipulation of facts” as the basis for their requests before this Court. Id. at
21-22. The Commonwealth explains that the receipts of the transactions fail to meet
the description requirement of the regulation, that is, the receipts fail to identify the
items and the coupons with sufficient specificity to allow a reduction of the purchase
price. Id. at 21. The Commonwealth argues that the description requirement in the
regulation is to enable Revenue to “fulfill its legislative mandate of ensuring
compliance with the Tax Code” by requiring objective documentation created at the
time of the transaction to allow for a reduced purchase price upon the presentation
of coupons. Id. at 20.
             Though Taxpayers argue that coupons are tangible personal property
entitling them to a reduced purchase price, the Commonwealth explains that the
issue is not “as straightforward” as presented by Taxpayers. Commonwealth’s Brief
at 30-31. Assuming that coupons are tangible personal property, the Commonwealth
contends that Taxpayers produced no evidence that they used “paper coupons” nor
did they develop evidence of the nature, types or terms of the coupons to support
their assertion that they were “tangible personal property taken in lieu of the whole
or part of the purchase price” to entitle them to a reduced purchase price per Section
201(g)(2) of the Tax Code. Id. at 31. Therefore, the Commonwealth seeks an order
denying Taxpayers’ petitions. Id. at 33.



                                           6
               Intervenor BJ’s agrees with the Commonwealth that Revenue’s
regulation is consistent with the Tax Code. BJ’s asserts that Taxpayers’ reliance on
Section 201(g)(2) is in error because coupons are not tangible personal property.
BJ’s’ Brief at 18. BJ’s asserts that the Tax Code imposes sales tax on the purchase
price of taxable items, referred to as tangible personal property, and coupons are not
taxable items.       Id.    BJ’s contends that Revenue’s regulation explains the
circumstances under which the use of a coupon may establish a new purchase price
and contends it complied with Revenue’s regulation and appropriately taxed the full
purchase price of the items purchased by Taxpayers at retail because the receipts do
not “specifically describe the coupons nor link them to any specific items.” Id. at
17.
                                           Analysis
               Initially, we observe that Section 270(a) of the Tax Code grants
Revenue broad authority to enforce Article II6 of the Tax Code relating to taxes for
education, which include sales tax. 72 P.S. § 7270(a). Section 270(a) provides that
Revenue is:
               authorized and empowered to prescribe, adopt,
               promulgate and enforce, rules and regulations not
               inconsistent with the provisions of this article, relating to
               any matter or thing pertaining to the administration and
               enforcement of the provisions of this article, and the
               collection of taxes, penalties and interest imposed by this
               article. . . .
72 P.S. § 7270(a). Thus, Revenue has the authority to adopt regulations that are “not
inconsistent with the provisions” of Article II and that relate to the enforcement and
the collection of sales tax. Id.



      6
          See Sections 201-282 of the Tax Code, 72 P.S. §§ 7201-7282.
                                               7
               An agency exceeds its legislative rulemaking powers when regulations
are “so entirely at odds with fundamental principles as to be the expressions of a
whim, rather than an exercise of judgment.” Quest Diagnostics Venture, LLC v.
Commonwealth of Pennsylvania, 119 A.3d 406, 413 (Pa. Cmwlth. 2015). Upon
review of the plain language of the Tax Code and 61 Pa. Code § 33.2(b)(2), we
conclude that the regulation is not inconsistent with the Tax Code as asserted by
Taxpayers.
               Section 202(a) of the Tax Code provides:


               There is hereby imposed upon each separate sale at retail
               of tangible personal property . . . as defined herein, within
               this Commonwealth a tax of six per cent of the purchase
               price, which tax shall be collected by the vendor from the
               purchaser, and shall be paid over to the Commonwealth as
               herein provided.
72 P.S. § 7202(a) (emphasis added). The term “purchase price” is defined by Section
201(g)(1)-(2) of the Tax Code, in pertinent part,7 as follows:

                   (1) The total value of anything paid or delivered, or
                   promised to be paid or delivered, whether it be money
                   or otherwise, in complete performance of a sale at retail
                   or purchase at retail, as herein defined, without any
                   deduction on account of the cost or value of the
                   property sold, cost or value of transportation, cost or
                   value of labor or service, interest or discount paid or
                   allowed after the sale is consummated, any other taxes
                   imposed by the Commonwealth of Pennsylvania or any
                   other expense except that there shall be excluded any


       7
          The term “purchase price” is defined in Section 201(g) of the Tax Code and includes eight
subparts, that is, Section 201(g)(1)-(8), 72 P.S. § 7201(g)(1)-(8). But, the parties focus their
dispute on Section 201(g)(1)-(2) of the Tax Code and we, therefore, will focus our analysis on this
part of the definition.
                                                8
                gratuity or separately stated deposit charge for
                returnable containers.

                (2) There shall be deducted from the purchase price the
                value of any tangible personal property actually taken
                in trade or exchange in lieu of the whole or any part of
                the purchase price. For the purpose of this clause, the
                amount allowed by reason of tangible personal
                property actually taken in trade or exchange shall be
                considered the value of such property.

72 P.S. § 7201(g)(1)-(2) (emphasis added).
            Section 201(g)(1) of the Tax Code squarely addresses Taxpayers’
transactions. Section 201(g)(1) provides that the purchase price is the “total value
of anything paid” to complete performance of a sale at retail. 72 P.S. § 7201(g)(1).
Though a vendor can accept the value of “anything paid” to complete performance
of a sale at retail, a vendor cannot take the deductions expressly enumerated in
Section 201(g)(1). Id. Of relevance here, a vendor cannot take any deduction on
account of the “discount paid or allowed after the sale is consummated.” Id.
(emphasis added). However, as reflected on the receipts, Taxpayers presented
coupons to BJ’s for a discount prior to consummation of the sales. By presenting
the coupons as value prior to consummation of the sales, Taxpayers sought a reduced
purchase price. While the statute does not directly address discounts taken prior to
the consummation of the sale, Revenue’s regulation does.
            Revenue’s regulation provides, in pertinent part:

            (b) Exclusions. Amounts which are excluded from the
            taxable portion of purchase price, if separately stated and
            identified, include:
            (1) Returnable containers. Deposit charges for returnable
            containers.


                                         9
             (2) Discounts. Amounts representing on-the-spot cash
             discounts, employe discounts, volume discounts, store
             discounts such as “buy one, get one free,” wholesaler’s or
             trade discounts, rebates and store or manufacturer’s
             coupons shall establish a new purchase price if both the
             item and the coupon are described on the invoice or cash
             register tape. An amount representing a discount allowed
             for prompt payment of bills which is dependent upon an
             event occurring after the completion of the sale may not
             be deducted in computing the tax. A sale is completed
             when there is a transfer of ownership of the property or
             services to the purchaser. [Examples omitted.] . . . .
             (3) Trade-in or exchange. The amount allowed by the
             vendor for the acceptance of tangible personal property
             taken in exchange at the time of sale.
             (4) Finance charges. Reasonable interest or finance
             amounts charged to the purchaser.
             (5) Gratuity. A voluntary payment by the purchaser or a
             reasonable mandatory charge by the vendor in lieu of the
             voluntary payment, which is billed to the purchaser for
             services rendered in connection with the purchase of food
             or beverages or hotel or motel accommodations.


61 Pa. Code § 33.2(b) (emphasis in original and added). As expressly provided in
subsection (b)(2), amounts excluded from the “taxable” portion of the purchase price
include discounts or coupons “described on the invoice or cash register tape.” Id.
Pursuant to the regulation, a sale is consummated, or completed, when the property
is transferred to the purchaser. Id. The invoice or cash register tape describes the
sale that has been consummated, including the deduction for amounts excluded from
the purchase price prior to the consummation of the sale. Because the regulation
addresses discounts taken prior to the consummation of the sale, it does not conflict
with Section 201(g)(1) of the Tax Code, which addresses discounts taken after the
sale is consummated.

                                         10
               As stated, for a purchaser to obtain the benefit of a new purchase price
due to a coupon, the coupon must be separately stated and identified and appear on
one of two types of records, an invoice or cash register receipt. 61 Pa. Code §
33.2(b)(2). An invoice documents how much consideration is owed by the purchaser
to the vendor and a receipt documents how much consideration is paid by the
purchaser to the vendor to consummate the sales transaction.8 The invoice or receipt
must describe both the item and the coupon for the purchaser to receive the new
purchase price. By requiring the vendor to document the item purchased and the
coupon accepted as part of the transaction, Revenue ensures that when a vendor
renders a discount, it does so prior to consummation of the sales transaction, thereby
avoiding any conflict with the plain language of Section 201(g)(1) of the Tax Code
prohibiting deductions to the purchase price after the sale is consummated.
               To further illustrate this point, Revenue provided examples in the
regulation explaining how discounts work in various situations:


                (i) “A” purchases two hamburgers from “R” restaurant
               with a “buy one, get one free” coupon. The price of one
               hamburger is $1. “R” rings up $2 on the cash register. “R”
               enters a credit in the cash register for the amount of $1
               resulting in an adjusted price of $1. The acceptance of the
               coupon by “R” establishes a new purchase price of $1
               which is subject to 6¢ tax.
                (ii) “A” purchases 15 grocery items from “B” grocery. All
               of the items are exempt from tax except a bottle of soft

       8
          An invoice is defined as “[a]n itemized list of goods . . . furnished by a seller to a buyer,
usu. specifying the price and terms of sale; a bill of costs.” Black’s Law Dictionary at 991 (11th
ed. 2019) (emphasis added). The “cash register tape” records the amounts provided by the
purchaser to the vendor documenting the sales transaction. A cash register is an “[e]lectronic
device used to calculate financial transactions” and has a “printing device for receipts.” See
Business Dictionary at http://www.businessdictionary.com/definition/cash-register.html (last
visited 4/27/20) (emphasis added).
                                                 11
             drink. The price of the soft drink is $1. “A” gives “B” a
             manufacturer’s coupon having a face value of 50¢ for the
             soft drink. “B” totals the 15 items on the cash register
             including $1 for the bottle of soft drink. None of the items
             are described or identified on the cash register tape. “B”
             reduces the total sale by $1--double the amount of the
             coupon. The coupon is not described or identified on the
             register tape. Therefore, the acceptance of the coupon by
             “B” does not establish a new purchase price. The $1
             purchase price of the soft drink is subject to 6¢ tax. The
             redemption of the coupon represents a refund which does
             not affect the purchase price of the soft drink.
             (iii) “A” purchases a coffee pot from “C” department
             store. The price of the coffee pot is $30. “A” pays sales tax
             upon the purchase of the coffee pot in the amount of $1.80.
             The sale includes a $10 manufacturer's mail-in-rebate
             form. “A” completes the form, mails it to the manufacturer
             and receives a $10 check from the manufacturer. The
             receipt of the rebate check by “A” does not establish a new
             purchase price of the coffee pot. “C” properly collected
             sales tax in the amount of $1.80.
             (iv) “A” purchases and accepts delivery of a load of
             lumber from “D” lumber company. “D” sends “A” a
             billing invoice which states “lumber--$1,000, sales tax--
             $60.” The invoice also states “if invoice paid within 30
             days, customer entitled to a 1% discount.” “A” pays the
             invoice within 5 days. “A” is entitled to a discount of 1%
             of $1,000, but is required to pay the sales tax in the amount
             of $60 as a new purchase price has not been established.
61 Pa. Code § 33.2(b)(i)-(iv) (emphasis added).
             As evidenced by the foregoing examples, the regulation requires the
vendor to document discounts taken on taxable items on an invoice or receipt prior
to consummation of the transaction. If the coupon is presented for an item but it is
not discernable that the item is taxable, then the discount does not apply to lower the
purchase price. See 61 Pa. Code § 33.2(b), Ex. (ii). If the coupon is accepted and
action is required after the transaction is complete for the purchaser to receive the
                                          12
value represented by the coupon, then the coupon is deemed a refund rather than a
discount. See 61 Pa. Code § 33.2(b), Ex. (iii) & (iv). Example (iv) provides that if
a purchaser receives and pays an invoice after receipt of the goods and receives a
discount, the purchaser is not entitled to a new purchase price. This language is
consistent with Section 201(g)(1), which provides that any “discount paid or allowed
after the sale is consummated” does not reduce the purchase price. 72 P.S. §
7201(g)(1). Finally, if the item is taxable and the vendor, upon receipt of the coupon,
credits the amount of the coupon during the sales transaction as reflected on the
invoice or receipt then the discount applies and the purchaser gets the benefit of a
lower purchase price. See 61 Pa. Code § 33.2, Ex. (i). The regulation provides the
circumstances under which a discount may apply to reduce a purchase price as long
as it is taken prior to the consummation of the sale and is not, then, in conflict with
Tax Code Section 201(g)(1). Additionally, because the regulation relates directly to
the collection of sales tax by governing what amounts are excluded from the
purchase price, Revenue promulgated it in accordance with its broad enforcement
authority as provided in Section 270(a) of the Tax Code, 72 P.S. § 7270(a).9
               We further conclude that Taxpayers’ argument that coupons are
“tangible personal property” under the Tax Code, and, therefore, the purchase price


       9
          By requiring the vendor to document a taxable item and a coupon on an invoice or receipt,
the vendor is able to establish that it collected the appropriate amount of sales tax. This
documentation allows Revenue to perform its enforcement function, which is to examine the
vendor’s records to ensure that the vendor collected the proper amount of sales tax required by
Article II of the Tax Code. See Section 271(a) of the Tax Code, 72 P.S. § 7271(a) (providing that
“[e]very person liable for any tax imposed by . . . [Article II], or for the collection thereof, shall
keep the records” and comply with such rules and regulations as Revenue may, from time to time,
prescribe regarding matters pertinent to his business); see also Section 272 of the Tax Code, 72
P.S. § 7272 (providing that Revenue is to “examine any person, under oath, concerning taxable
sales or use by any taxpayer or concerning any other matter relating to the enforcement or
administration” of Article II).

                                                 13
must be reduced by the value of such coupon in accordance with Section 201(g)(2),
is without merit. Taxpayers’ Brief at 15-18. As stated, Section 201(g)(2) provides
that there: “shall be deducted from the purchase price the value of any tangible
personal property actually taken in trade or exchange in lieu of the whole or any
part of the purchase price.” 72 P.S. § 7201(g)(2) (emphasis added). Notably,
Section 201(g)(2) also provides: “[f]or the purpose of this clause, the amount
allowed by reason of tangible personal property actually taken in trade or exchange
shall be considered the value of such property.” Id.
             We observe that some coupons have a material existence and can be
possessed in a physical form, and printed coupons “commonly [have] a value printed
on [their] face in a fraction of a cent.” Taxpayers’ Brief at 17. However, the value
of the coupon is not in its tangibility but, rather, in what it represents. A coupon
represents value, that is, an amount to discount the tangible personal property for
which it is presented during a sales transaction. See State ex. rel. Clayburgh v. Am.
W. Cmty. Promotions, Inc., 645 N.W.2d 196, 212 (N.D. 2002) (holding that coupon
books are not subject to sales tax because the purpose in buying a coupon book is
not to “obtain the book itself” but to “to obtain the right to receive discounts that are
represented by the coupons”). Because a coupon’s value cannot be touched, seen or
realized on its own, as its value is connected to the tangible personal property to
which it applies, it is intangible property for taxation purposes. See DeGiorgis v.
3G’s Contracting, Inc., 62 A.3d 1024, 1027 (Pa. Super. 2013) (citing In re
Macfarlane’s Estate, 459 A.2d 1289, 1291 (Pa. Super. 1983)) (explaining that
intangible property “has no intrinsic or marketable value, but is merely the
representative or evidence of value, such as certificates of stock, bonds, promissory
notes, and franchises”). It is of no consequence as to whether the coupons used were


                                           14
paper coupons or electronic coupons, as this distinction does not change the fact that
the coupon is only representative of value. Accordingly, we cannot agree with
Taxpayers that coupons are tangible personal property or that Section 201(g)(2)
supports their assertion that they are entitled to a deduction in the purchase price
pursuant to this rationale.
             Although we conclude that Revenue’s regulation is not in conflict with
the Tax Code, we agree with Taxpayers that the Board erred in its application of the
regulation. The regulation provides that a store or manufacturer’s coupons “shall
establish a new purchase price if both the item and the coupon are described on the
invoice or cash register tape.” 61 Pa. Code § 33.2(b)(2) (emphasis added). The
Board stated that:

             When the receipt contains both taxable and nontaxable
             items it must be established that the coupon relates to a
             taxable item before a reduction can be made to the taxable
             purchase price thereby reducing the sales tax charged.

             Although BJ’s maintains History Reports that are more
             descriptive than the receipts, the coupons are not
             adequately described on the receipts presented and there is
             nothing to indicate to which item the coupon relates. The
             description on the receipt is “SCANNED COUP.”
             Consequently, the Board concludes that the acceptance of
             the coupon by BJ’s does not establish a new purchase
             price, and therefore, sales tax is due on the price of the
             items purchased without coupon deduction.

Board Opinions at 4; Stip. Exs. N & O (emphasis added). The Board erred when it
provided that to obtain a reduced purchase price, the regulation requires the receipt
to specify to which taxable item it relates rather than simply requiring a description
that allows one to discern that a taxable item was purchased and a coupon was

                                         15
accepted that applied to a taxable item purchased. Id. There is no requirement within
the regulation that the receipt indicate to precisely which taxable item the coupon
relates. See 61 Pa. Code § 33.2(b)(2). With the requirements of the regulation in
mind, we now examine the receipts of the four transactions.
               Initially, we observe that on the printed receipts,10 next to the items
purchased and coupons, are the initials “T” and “N.” These initials are not defined
on the receipts but the Commonwealth asserts, and Taxpayers do not dispute, that
the “T” refers to a taxable item while an “N” refers to a non-taxable item.
Commonwealth’s Brief at 23. Turning to Taxpayer Myers’ three transactions, we
begin with an examination of the August 22nd and 25th transactions that involved
the purchase of one item.
               In the August 22nd transaction, Taxpayer Myers purchased one item as
provided on the relevant part of the receipt:




       10
            Taxpayers assert that the Board erred by refusing to consider the purchase history
reports. Taxpayers’ Brief at 10-11. We disagree. The purchase history reports have no relevance
to the resolution of this matter. The regulation requires the description of both the item and the
coupon to appear on one of two types of records: an invoice or cash register tape (that is, the
receipts). See 61 Pa. Code § 33.2(b). The regulation does not allow for consideration of other
types of records created by vendors after the transaction ends, such as the purchase history reports,
to ascertain the purchase price of an item.

                                                16
See Stip. Ex. C. As noted above, the receipt shows on the first line: “TIDY CAT
38#   13.49 T.” On the second line, the receipt shows “SCANNED COUP 3.00-
T.” Id. The subtotal for the item was “10.49” followed by the imposition of sales
tax in the amount of “.81” to reach a total of “11.30.” Id.
             In the August 25th transaction, Taxpayer Myers also purchased one
item as provided on the relevant part of the receipt:




                                          17
Stip. Ex. D. Similarly, in the August 25th transaction, the receipt shows on the first
line: “ONE CAT 16#        21.99 T.” Id. On the second line, the receipt shows:
“SCANNED COUP 1.00-T.” Id. The subtotal for the item was listed at “20.99”
followed by the imposition of sales tax in the amount of “1.32” to reach a total of
“22.31.” Id. In both transactions, BJ’s accepted as consideration the amount of the
coupon along with a credit card payment to complete the transactions and the six
percent sales tax was imposed on the original (or pre-coupon) purchase price of the
item. Stip. Exs. C & D.
             Applying the regulation here, the amounts representing the items and
the scanned coupon were “separately stated” on the receipts. The second line
“identified” that a coupon was scanned or accepted as part of the consideration and
the receipt “described” the amount of the coupon¸ showed it was for a taxable item
as it was marked with a “T” and showed how the amount reduced the total amount
owed or purchase price owed to complete the sales transactions. See 61 Pa. Code §
33.2(b)(2) (noting that “coupons shall establish a new purchase price if both the item
and the coupon are described”) (emphasis added); see Stip. Exs. C & D (providing
the subtotal owed for the August 22nd transaction was $10.49 for an item priced at
$13.49 and the subtotal for the August 25th transaction was $20.99 for an item priced
at $21.99). Though the Commonwealth argues that there is nothing on the receipt
identifying the nature of the coupon (that is, whether it is a rebate or a store or
manufacturer’s coupon) to enable this Court to evaluate whether the acceptance
thereof establishes a new purchase price, Commonwealth’s Brief at 23, there is no
requirement in the regulation that the “nature” of the scanned coupon be described
by name or be directly related to or connected to a particular item purchased. When
one taxable item is purchased and one coupon for a taxable item is scanned, there


                                         18
can be no question that the coupon related to a taxable item purchased. The
regulation simply requires that the “amounts” representing “both the item and the
coupon” be “described on the invoice or cash register tape.” See 61 Pa. Code §
33.2(b)(2). To require more asks this Court to add words to the regulation that are
not present.
               We now examine the remaining two transactions, the June 13th and
June 25th transactions, which involved purchases of several items followed by
several “SCANNED COUP” notations. Stip. Exs. A & B. The receipt produced by
Taxpayer Myers for the June 13th transaction provided, in relevant part:




Stip. Ex. B. For Taxpayer Myers’ June 13th transaction, the receipt shows six items
purchased, each on a separate line, followed by five scanned coupons each listed on
the next five lines that were presented, with other consideration, to complete the


                                        19
transaction. Id. Of the six items purchased, all six had a “T” following the purchase
price of the item as did the five coupons. Id. It is clear that all six items purchased
on this cash register tape were taxable items. It follows, then, that the five coupons,
all marked with a “T,” must have related to taxable items. Accordingly, Taxpayer
Myers is entitled to refund of the overpayment of tax represented by the amount of
the coupons that should have been excluded from the original purchase price.
               To the contrary, the June 25th11 transaction receipt for Taxpayer Reihl’s
transaction provided, in relevant part:




Stip. Ex. A. The June 25th receipt shows a total of six items purchased, each on a
separate line with an amount for each item, and BJ’s accepted four scanned coupons,
each listed on the next four lines, presented to complete the transaction with other

       11
          The receipt bears the date of June 26, 2012, but the parties stipulated to the transaction
date of June 25, 2012. Stip. ¶15 & Ex. A.
                                                20
consideration. Id. Notably, of the six items purchased, only two items had a “T”
following the purchase price, while the remaining four items had an “N” on the
receipt following the purchase price. Id. In addition, the register tape only identifies
“SCANNED COUP.” Id. This identification is insufficient to determine whether
the coupon was applicable to a taxable item and any discount represented by the
coupon cannot be excluded from the purchase price in accordance with the
regulation. Therefore, Taxpayer Reihl failed to establish an entitlement to a refund
of an overpayment of tax.
             Where there is only one item purchased and sales tax is imposed, it is
obvious that the item purchased was a taxable item. Furthermore, when there is only
one coupon applied prior to the consummation of the sale or during the sales
transaction, where only one taxable item was purchased, like Taxpayer Myers’
August 22nd and August 25th transactions, it is evident that the coupon applied to
that single taxable item. When all items are described as taxable and all of the
coupons relate to taxable items, as is the case with Taxpayer Myers’ June 13th
transaction, no further description is required. It is evident from the receipts that the
coupons applied to taxable items and the description was adequate, which means
that an overpayment of tax was paid when the coupon amount was not excluded
from the original purchase price for calculation of sales tax owed. When all items
are not identified as taxable and all coupons not identified as relating to a taxable
item, the description is inadequate and the amount of the coupons cannot serve to
reduce the purchase price as is the case with Taxpayer Reihl’s June 25th transaction.
             Here, the Board correctly stated that “[w]hen the receipt contains both
taxable and nontaxable items it, must be established that the coupon relates to a
taxable item before a reduction can be made to the taxable purchase price thereby


                                           21
reducing the sales tax charged.” Board Orders dated 3/30/16 p.4 (emphasis added).
The Board correctly interprets the word “described” in the regulation to mean that
there must be an indication that a taxable item was purchased and that the discount
was for a taxable item or applicable to taxable items, so that the purchase price to
which the tax is applied can be reduced by the amount of the coupon. However, we
note that the Board did err in its application of the rule when it reasoned that “there
is nothing to indicate to which item the coupon relates.” Id. (emphasis added). The
regulation does not require that the coupon relate to a particular taxable item; the
regulation simply requires that “both the item and the coupon” be “described on the
invoice or cash register tape.” 61 Pa. Code § 33.2(b)(2). Reason dictates that the
description need only be in a manner sufficient to show that the amounts reflected
by the coupon apply to a taxable item to allow for the reduction from the taxable
portion of the purchase price. To interpret otherwise would allow BJ’s to collect tax
from customers on amounts for which no tax was due.
             Based on the foregoing, we reverse the Board’s denial of Taxpayer
Myers’ request for refunds relating to the June 13th, August 22nd and August 25th
transactions, as the receipts can be interpreted in no other manner than for the
coupons to relate to the purchase of taxable items. Though the Board erred with
respect to Taxpayer Myers’ transactions, we affirm the denial of Taxpayer Reihl’s
request for a refund as to the June 25th transaction.



                                        __________________________________
                                        CHRISTINE FIZZANO CANNON, Judge




                                          22
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA



John G. Myers,                           :
                    Petitioner           :
                                         :
            v.                           :
                                         :
Commonwealth of Pennsylvania,            :   No. 274 F.R. 2016
                Respondent               :
                                         :
                                         :
Cecelia A. Reihl,                        :
                    Petitioner           :
                                         :
            v.                           :
                                         :
Commonwealth of Pennsylvania,            :   No. 275 F.R. 2016
                Respondent               :


                                    ORDER


            AND NOW, this 11th day of May, 2020, the order of the Board of
Finance and Revenue (Board) dated March 30, 2016 denying John G. Myers’ request
for refunds is REVERSED. The order of the Board dated March 30, 2016 denying
Cecelia A. Reihl’s request for a refund is AFFIRMED. Unless exceptions are filed
within 30 days pursuant to Pa.R.A.P. 1571(i), this order shall become final.




                                      __________________________________
                                      CHRISTINE FIZZANO CANNON, Judge
