I receive emails from readers who are on food assistance and are using Super-Couponing techniques to stretch their budgets. Shoppers who receive government assistance for food face unusual issues.
Q: Recently, I was using coupons at the supermarket to stretch my food stamps. I was shocked when they charged me tax on the items I used coupons for! I didn’t have any nonfood items, so I put back the items with coupons. I called the Department of Health and Welfare to let them know and they were shocked and said this was against the law. Food stamp purchases are not taxable, regardless of whether coupons are used.
Q: I am on government assistance for food, and I have a debit card to buy groceries. When you sign up, they tell you to use coupons as much as possible. But at my supermarket, you have to pay the tax in cash for every coupon you use. Some people just don’t have the extra cash.
A: Shoppers who use food stamps or assistance are not supposed to be charged tax for groceries. Unfortunately, judging from the emails, the problem is fairly common.
They take groceries and coupons to the register expecting a tax-free purchase and discover they owe tax, and must pay the balance in cash.
Food purchased with assistance programs is not supposed to be charged tax. And if someone’s budget is stretched to the limit, she may not be carrying any cash.
From what I’ve gathered, the problem begins after the coupons are scanned and the method of payment is entered as a tax-free food assistance program. Most stores will correctly note that no tax should be charged. But some separate purchases into two categories: products with coupons applied and those without. The register automatically charges tax on the couponed items.
In short, the scanners view coupons as cash payment and determine that the tax on couponed items must also be paid in cash. If the shopper uses no coupons and just relies on food assistance, they are not charged tax. As frustrating as this situation is, I would still encourage anyone on food stamps to use coupons. You’ll enjoy greater savings, even with the tax you may have to pay. Using coupons also will make your allocated food funds last longer.
Plus, many aid programs only cover edible food. Using coupons for paper goods, detergent, toiletries and pet food will help lower your expenses on noncovered products.
One of my favorite emails was short and sweet: “Jill, just wanted to let you know that I’m now off food stamps because of my couponing!”