Charges for 'Free Gift Cards' Taxable in New York

Friday, November 16th, 2018

 
 
Young woman exchanging gift card for consumer goods.
Share
Link
New York
General

The New York Division of Tax Appeals recently ruled that a taxpayer was giving away gift cards with the purchase of a qualifying product rather than providing a discount on qualifying products with the purchase of a gift card.

The taxpayer implemented a back-to-school program entitling purchasers to a free gift card with the purchase of a qualifying product. Due to issues with its point-of-sale system, the taxpayer charged customers for the free gift card and then applied a discount equal to the value of the card to the qualifying product.

New York does not tax gift card sales, but does tax tangible personal property (e.g., the taxpayer's qualifying products). The ruling found that the taxpayer was not actually charging customers for gift cards. Instead, the taxpayer was charging for the gift card in order to accommodate its point-of-sale system. As a result, the ruling determined that tax applied to the full price of the qualifying product rather than the discounted price that was charged to accommodate the free gift card.

https://www.ttrus.com/Chargesfor"FreeGiftCards"TaxableinNewYork


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

New York Adopts New Economic Nexus Rule

Wednesday, January 23rd, 2019 -Effective January 2019, a retailer located outside of New York is required to collect use tax if, during the p...

New Commercial Farmer Certification Process in Louisiana

Monday, January 21st, 2019 -Effective January, 15, 2019, the Louisiana Department of Revenue has a new certification process for commercia...

Service Repairs to Petroleum Storage Tanks Exempt in...

Friday, January 18th, 2019 -Louisiana's Board of Tax Appeals recently ruled that repairs on petroleum storage tanks were not taxable. ...

Nevada Exempts Feminine Hygiene Products in 2019

Wednesday, January 16th, 2019 -Last year, Nevada voters approved via ballot measure changes to the Sales and Use Tax Act of 1955. Voters amen...

Cleaning of Beer-Tap Lines Not Taxable in Ohio

Monday, January 14th, 2019 -The Supreme Court of Ohio recently ruled that cleaning beer-tap lines is not taxable. The taxpayer was...

Louisiana Court of Appeals Finds Marketplace Facilitators...

Friday, January 11th, 2019 -The Louisiana Court of Appeals has recently addressed the sales tax liability of marketplace facilitators. A c...