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RebelTrooper
02-11-2012, 05:40 PM
Here's what happened to me.

I was buying an item for $54.00 and had a $50.00 gift card.

They rang up the item as $54.00 plus tax which brought the total to $58.46. They then deducted the $50.00 gift card which left $8.46 that I had to cover.

Is it normal when using a gift card for stores to charge tax on the total cost of the item and then apply the gift card amount? Shouldn't they deduct the $50.00 gift card amount from the $54.00 and then apply tax to the remaining $4.00? I had to pay tax on $54.00 rather than $4.00 which just seems wrong to me.

I don't have much experience with gift cards so I don't know what the rules are for how(or at what point in the sales process) sales taxes are supposed to be applied.

Thanks,

John

RedHarlow
02-11-2012, 06:08 PM
Pretty sure it's common practice for any store to take the giftcard off the grand total, not pre-tax. Perhaps there's some law, but they get more money that way.

The_Chosen_1
02-11-2012, 06:34 PM
Pretty sure it's common practice for any store to take the giftcard off the grand total, not pre-tax. Perhaps there's some law, but they get more money that way.

You're correct save for one thing: the store doesn't get more money that way, since it never sees a cent of the tax amount in its bottom line. That goes to the government. But yeah, there must be a law about charging tax for the full amount.

RebelTrooper
02-11-2012, 07:01 PM
Thanks for the replies!

I did a little research and found out that Walmart doesn't charge tax when a person buys a gift card from them, so it would make sense that any purchases made using a gift card would be taxed.

Thanks again.

John

Galen_Marek
02-11-2012, 07:01 PM
I suppose the store could just charge tax when you BUY the gift card, but I think it's just easier to charge tax on the purchase.

WarCry
02-11-2012, 07:02 PM
We've learned that tax is applied to the overall bill, but that's not correct. EVERY item you buy has tax*. If you purchased every item individually, you'd still be paying the same tax percentage. So, what you're asking is whether they can remove that tax because you're using a gift card. The answer is "of course not."

Also, the gift card isn't some "magic" device that changes the rules of purchasing. When you handed that plastic to them, it's absolutely NO different than handing over a $50 bill. Gift cards are exactly like cash, no different (which is also why you don't want to lose them).

So, you can answer your own question by assuming you had a $50 bill rather than the gift card. Do you think that should apply before the tax, too?




*The note here is because some states don't do sales tax, and some tax differently. But this was intended to be a statement in a broader sense than specific tax laws.

Mofo_Jones
02-11-2012, 08:33 PM
The gift card is just a form of payment. Sales tax* is applied to the entire amount of the sale, regardless of whether you pay by cash, gift card, check or charge.



*in states, counties and municipalities where applicable.

RebelTrooper
02-11-2012, 08:41 PM
We've learned that tax is applied to the overall bill, but that's not correct. EVERY item you buy has tax*. If you purchased every item individually, you'd still be paying the same tax percentage. So, what you're asking is whether they can remove that tax because you're using a gift card. The answer is "of course not."

Also, the gift card isn't some "magic" device that changes the rules of purchasing. When you handed that plastic to them, it's absolutely NO different than handing over a $50 bill. Gift cards are exactly like cash, no different (which is also why you don't want to lose them).

So, you can answer your own question by assuming you had a $50 bill rather than the gift card. Do you think that should apply before the tax, too?




*The note here is because some states don't do sales tax, and some tax differently. But this was intended to be a statement in a broader sense than specific tax laws.


That makes sense about the gift card being the same as cash. That's the best way to look at it.

The main issue is the point at which they charge the tax. If they charged tax for purchasing a gift card, then the tax would've been collected at that time, but since they don't charge tax when purchasing a gift card, they tax the items that the gift card is being used to pay for.

Thanks for all the replies.

John