They tried this at my car dealer here in Texas the last time I bought a new one. Big rebate, but they tried to tax the car before the rebate. I had evidence all over the place that they were wrong. So I was ready to walk, and then they owned up...but they pushed and pushed right until the end.
Very interesting. I think it works the other way around here in New Jersey. If an item is “discounted,” then the sales tax is paid on the discounted price. If there is a “rebate” involved, then the tax is computed on the original price even if the rebate is applied right on the spot (as opposed to mailing in a form to get it back later). This is an important consideration in car purchases. If the sticker price is $25,000 and you negotiate it down to $22,500 . . . and the manufacturer is offering a $1,500 rebate on top of all that to bring the price down to $21,000, then you pay the sales tax based on the $22,500 price.