Coupons, Vouchers and Gift Cards – Food, Meals and Drinks

Customers often use coupons, vouchers or gift cards to pay for all or part of the bill. Tax these payment types as follows.

Coupons

Does a third party reimburse you?Charge sales tax on:Example
YesTotal sales price before you subtract the discount amountManufacturer’s coupon
NoSales price after you subtract the discount amountCoupon you distribute in a newspaper or online

Vouchers

Vouchers are something that a customer can use for a discount on a product or service, such as a two-for-one dinner or a manicure at a reduced price. The customer buys the voucher in advance from a third-party provider, such as Groupon.

Do you know how much the customer paid for the voucher?Charge sales tax on:
YesAmount the customer paid for the voucher
NoFace value of the voucher

Keep documentation to support the tax calculation on all discounted sales.

Gift cards and certificates

Don’t charge tax when a customer buys gift cards or certificates because they’re a form of payment. Charge sales tax on the price of the goods that someone buys using the gift cards or certificates.

You can’t treat a gift card redemption like it’s a retailer’s discount coupon, even if you sold the gift card or certificate at less than its face value.