Quote:
Originally Posted by slopokdave
I have seen some people who had pre-ordered at Best Buy and were charged tax for the $50 deposit/gift card. Was this maybe employee-error or because of their state/tax policy?
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I have read about this so much, I've totally forgotten where the threads where. I think they were on sprintusers.com.
Basically my understanding is that some states are not allowed to charge sales tax on gift cards. The reason being, is that you will be charged tax twice.
For example;
If you buy a $50 gift card and the tax is 10%, you'll pay $55.
When you go back to buy something for $50, you get taxed so the total is $55.
Then you hand them the $50 gift card, they subtract it from the total, now you still owe $5.
You paid the $5 tax twice.
The way it should work is;
You pay $50 and the gift card is worth $50.
When you buy something for $50, it comes to $55 w/ tax.
You hand them the $50 gift card and pay the tax of $5.
You paid the $5 tax once.
So, if someone bought a gift card and was charged tax, they should either go back and have it corrected or keep their receipt and make sure they get the full credit applied to their purchase. If they paid $54.36 for their $50 gift card, they need to be credited $54.36 when they apply that card to a purchase.