I receive quite a few e-mails from readers who are on food assistance and are also using Super-Couponing techniques to stretch their budgets. Shoppers who receive government assistance for food purchases face some unique issues at the grocery store.
Question: “Recently, I was using coupons at the supermarket to stretch my food stamps. Imagine my shock when they charged me tax on the items I used coupons for! I didn’t have any non-food items, or use cash for that matter, so I put back the items with coupons and didn’t use them there again. 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. I attempted to pursue the issue with both the store and the department. Long story short, several calls later and it’s still the same. It’s sad, really.”
Question: “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 friend who is also on the program will not use coupons simply because she doesn’t have the cash.”
Answer: It’s true that shoppers who use food stamps or assistance are not supposed to be charged tax for grocery purchases. Unfortunately, judging from the e-mails I receive, the problem that these shoppers wrote in about is fairly common. Many shoppers who use coupons and food aid report the same problem. They take their groceries and coupons to the register expecting a tax-free purchase and discover that they owe tax. Worse, they must pay the tax balance in cash.
You might think, “Oh, it’s only cash.” But there are two problems with this assumption. Food purchases made with assistance programs are not supposed to be charged tax. And if someone’s budget is stretched to the limit, they may not be carrying any cash to pay the tax.
Why is this happening? From what I’ve gathered, both from my e-mail inbox and from a coupon shopper kind enough to show it to me, firsthand, in the checkout lane recently, 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 stores 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 their food assistance money to pay, they are not charged tax. Inadvertently, food stamp programs may keep people from couponing, if they don’t have the cash to cover the tax.
As frustrating as this situation is, I would still like to encourage anyone on food stamps to use coupons. You’ll still enjoy greater savings, even with the tax you may have to pay out of pocket. Using coupons also will make your allocated food funds last longer. Plus, many food stamp programs only cover edible food. Using coupons for toilet paper, laundry and dish detergent, shampoo, shaving items, toothpaste and pet food will help lower your expenses on these non-covered categories of products.
Some of the happiest e-mails I receive are from people who share stories of how they use food stamps and coupons to help their families through difficult times. One of my favorite e-mails was short and sweet:
“Jill, just wanted to let you know that I’m now off food stamps because of my couponing!”
A powerful statement, indeed!
Jill Cataldo, a coupon workshop instructor, writer and mother of three, never passes up a good deal. Learn more about couponing at her web site, www.jillcataldo.com. E-mail your own couponing victories and questions to firstname.lastname@example.org.