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 |
|---|---|---|
| Yes | Total sales price before you subtract the discount amount | Manufacturer’s coupon |
| No | Sales price after you subtract the discount amount | Coupon 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: |
|---|---|
| Yes | Amount the customer paid for the voucher |
| No | Face 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.