OUR THOUGHTS ON:

Do You Groupon?

State and Local Tax

By Jennifer Koehler

Groupon, LivingSocial and other deal-of-the-day websites offer consumers an opportunity to purchase discounted gift certificates/vouchers that are usable at local or national companies. The gift certificates/vouchers are often purchased for less than face value and/or less than the value of the items or services that can be obtained with the certificates.

So, why is the Streamlined Sales Tax (SST) State and Local Advisory Council (SLAC) interested in these deal-of-the day opportunities? To define the sales price, of course. When these gift certificates are sold, what is the sales price? Is it the price that was paid by the customer? Is it the stated face value on the certificate? Is it the value of the goods or services that can be procured? Why is the sales price important? States need to know what amount constitutes the sales price so they can determine the amount of sales tax, gross receipts tax or other taxes that may be applicable to the transaction.

There are currently two separate proposals for interpretive rules regarding the treatment of deal-of-the-day vouchers. These proposals can be viewed, and public comments provided via the SST website.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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