I have always found that it is one coupon per item, regardless of the current price of the item. In other words, if it is just on sale (with no coupon) then you can use a coupon to knock 20% off the sale price (assuming it isn't excluded on the 20% coupon). What you cannot do is stack two coupons on the same item. In other words:
Normal price for creeper = $39.99
Sale price for creeper = $29.99
Coupon price for creeper = $17.99
You may:
Use a 20% off coupon applied to the sale price:
$29.99 - $6.00 = $23.99
OR you may:
Use the coupon for the creeper:
$17.99
BUT you may NOT:
Use the coupon for the creeper and the 20% off coupon:
$17.99 - $3.60 = $14.39
This has been my experience as well. If the item is on sale, you can still use the 20% off coupon, but you cannot use multiple coupons for the same item.
The verbage on the coupon itself seems to indicate that they could refuse a coupon for an item that's "on sale", but that seems to be the exception rather than the rule.