Washington Addresses Taxability of Deal-of-the-Day Discount Vouchers

Thursday, August 30th, 2012

 
 
Share
Link
Washington
General

The Washington State Department of Revenue recently issued a special notice discussing the taxability of items purchased using deal-of-the-day vouchers. Wash. Spec. Notice: Discount Vouchers (Wash. Dept. of Revenue Aug. 23, 2012). With the ever growing popularity of websites like Groupon and Living Social, states like Washington are taking steps to address the tax treatment of items purchased with these deal-of-the-day vouchers.

Vendors such as Groupon and Living Social work with retailers to offer deal-of-the-day vouchers to customers that allow them to purchase merchandise or services at a discounted price. The purchase of the voucher prior to redemption is not subject to tax because a taxable sale has not yet occurred. In order to determine tax liability, the retailer must look to the voucher. And, if the voucher indicates the amount the customer paid, the retailer will include that amount in the sales price of the merchandise purchased. If the retailer, through its agreement with vendors like Groupon and Living Social, knows the amount the customer paid for the voucher, that amount is to be included in the sales price for the merchandise purchased. For example, if a retailer enters into an agreement with Groupon in which Groupon will distribute vouchers that entitle the customer to $20 towards merchandise or a service for a $12 fee, tax will be charged on the $12 paid by the customer for the voucher. The voucher must clearly indicate what the customer paid for the voucher or the retailer must be aware of what the customer paid for the voucher through their agreement with Groupon. Any additional amount paid by the customer for merchandise or services will also be subject to tax.

If the retailer does not know what the customer paid for the voucher and it is not clearly indicated on the voucher itself, the retailer will treat the consideration paid by the customer as equal to the face value of the instrument. For example, if a customer brings a voucher into a store with a face value of $20, but the retailer does not know what the customer actually paid to obtain the voucher and it is not clearly indicated on the face of the voucher, tax will be charged on the face value: $20.


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.

Texas Releases Detailed Guidance on Exempt Organizations

Thursday, October 18th, 2018 -The Texas Comptroller has released a publication that provides detailed information on how sales and use tax a...

Telephone Answering Services Taxable in Arkansas

Tuesday, October 16th, 2018 -The Arkansas Department of Finance and Administration recently ruled that the service of answering calls on be...

Washington Provides Guidance on Lodging Tax for Online...

Friday, October 12th, 2018 -The Washington Department of Revenue released updated guidance that provides tax reporting information for bed...

Economic Nexus in West Virginia

Wednesday, October 10th, 2018 -The West Virginia State Tax Department announced that it will require remote sellers to begin collecting sales...

Idaho Provides Guidance on the Exemption for Medical...

Monday, October 8th, 2018 -The Idaho State Tax Commission recently released guidance that explains Idaho's sales and use tax laws for buy...

Arkansas Does Not Follow Federal Law on Foreign Income

Friday, October 5th, 2018 -The Arkansas Department of Taxation and Finance recently released an opinion that says the state does not conf...