and they go to redeem it or buy something with it then they also get charged tax? Would it be cheaper just to give them cash, although it wouldn't look as nice.
2006-12-07 06:48:32 · 9 answers · asked by noone 6 in Business & Finance ➔ Taxes ➔ United States
No, gift cards should not be taxable for sales tax purposes. The recipient pays the sales tax when they purchase the item with the gift card. If you charging up a gift card was taxable, then there would be in effect double taxation.
2006-12-07 06:51:59 · answer #1 · answered by jseah114 6 · 3⤊ 1⤋
You shouldn't be charged sales tax on a gift card purchase. It's basically the same as handing someone a check or cash, but just for a specific vendor. The sales tax will be paid by the person who uses the card. If they buy an item that costs $25 with the $25 gift card, the recipient will owe sales tax on the purchase.
Cash isn't any cheaper to give, unless you're buying a Visa debit card or something like that. They generally have a service charge to purchase them-what a rip-off!
2006-12-07 08:17:50 · answer #2 · answered by SuzeY 5 · 0⤊ 0⤋
Chances are good that you were improperly charged if the additional charge was sales tax. You can squawk to Radio Shack or next time go somewhere else that knows not to charge sales tax. Check it out most places will not charge you sales tax for the purchase of a gift card. Illinois has no sales tax on gift cards.
2016-05-23 04:09:51 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you are charged tax when purchasing a gift card, the store is doing it wrong. Nothing has been sold. It would be like charging tax if you give 2 tens and receive a twenty.
2006-12-07 10:55:30 · answer #4 · answered by STEVEN F 7 · 1⤊ 0⤋
No, I don't believe you are charged sales tax. The store from whom you purchase the gift card does not recognize the sale of the gift card as income. The store recognizes the income when the gift card is actually used by the recipient, and the recipient is responsible for the taxes for their purchase.
2006-12-07 06:53:15 · answer #5 · answered by kerry77 3 · 1⤊ 0⤋
No gift cards are not taxed. But one thing to remember is, that 95% of the gift cards I have seen out there do have expiration periods so if that person doesn't use the card in that time slot, the gift card is voided.
=)
2006-12-07 06:56:18 · answer #6 · answered by Kain 5 · 1⤊ 1⤋
When I have purchased giftcards from grocery stores for retail stores ( such as Gap, Nordstrom's or Barnes and Nobles), I have always paid sales tax on the gift card purchases. Yes, the recipient is required to pay sales tax on the items they purchase using the gift card. I'm not sure how it works when you buy a gift card directly from the retail store.
2006-12-07 07:01:09 · answer #7 · answered by Desirani 1 · 0⤊ 3⤋
Gift cards are not subject to sales tax.
2006-12-07 14:49:33 · answer #8 · answered by strawberrycrush 4 · 1⤊ 0⤋
They get charged tax, cash is nicer to receive & cash looks great, my favorite green color & the smell of money is the nicest parfum! Put me on your gift list! Good luck.
2006-12-07 06:52:09 · answer #9 · answered by jyone scotani 3 · 0⤊ 1⤋