Georgia Voucher Examples

October 30, 2012

1.$50 Voucher sold by Deal Company for $20. The face of the voucher indicates that the purchaser paid $20 for the voucher. By contract, the Deal Company is required to reimburse $20 to the seller. The purchaser qualifies for a $10 discount towards the purchase of a second voucher (the discount may be offered to all purchasers as a “deal of the day”, the purchaser may be entitled to the discount because of frequent purchases, or the purchaser is a member of a “reward” program). The second voucher does not indicate voucher was sold for a discount price. The “second” voucher also indicates that the purchaser paid $20.

VOUCHER RULE DOES APPLY. In regards to the first voucher, the difference between the value of the voucher and the amount the purchaser paid to a third party is a discount that is not included in the sale price under the rule. The sales price on which the sales tax is levied is $20.

In regards to the second “discounted” voucher, the sales price would be identical to the first ($20). The voucher would meet the definition of the rule and only the difference in the face value and the paid value as indicated on the face of the voucher would be excluded from the sales price.

2.Same facts as in Example #1 except the purchaser receives the second voucher at no extra charge. The voucher indicates on the face of that the purchaser paid “zero” to the Deal Company for the second voucher. By contract, Deal Company is required to reimburse $20 to the seller for all vouchers redeemed.

In regards to the second “free” voucher, the sales price would be identical to the first ($20). The voucher would meet the definition of the rule and only the difference in the face value and the paid value as indicated on the face of the voucher would be excluded from the sales price. The rule specifically provides that reimbursement paid in excess of the amount paid by the purchaser to the third party is included in the sales price.

[a1]

3.Deal Company sells gift cards that may be redeemed by the holder for purchases from Seller. The “cards” are plastic and labeled as a “gift card”. Deal Company sells the gift cards for $16.25. Deal Company retains $16.25 and provides future advertising services to Seller. The amount paid by the purchaser to the Deal Company is not shown on the face of the gift card.[a2]

VOUCHER RULE DOES NOT APPLY. The rule is not applicable because it does not provide for tax treatment of gift certificates. In general terms, a gift card is a cardpreloaded with a specified value that entitles the holder to receive goods or services of the specified value from the issuer. When the owner of a gift card redeems the gift card, etc., or a part thereof, for tangible personal property, sales tax is due on the total selling price of the tangible personal property.

In this example, if the owner of the gift card purchases a $25 item from Seller, the tax is computed on sales price of $25, and must be collected, reported and remitted by Seller. The Agreement provides that “sales price” applies to the total amount of consideration, “including cash, credit, property, and services…valued in money, whether received in money or otherwise”.

[a1]The TN rule ALSO explicitly states that if the face of a voucher shows both the “value” of the voucher and what was paid for the voucher then the difference is a discount. Upon redemption, this voucher face is the ONLY thing the dealer is going to see. For all practical purposes, no redeeming merchant is going to have knowledge of the contract terms regarding reimbursement. The rule should require that a DOD company cannot ever include a discount they offer (of any kind) on the face of the voucher.

[a2]This example is not sufficient to address Georgia’s concerns regarding gift cards/gift certificates. This example provides a very limited definition of a gift card as some tangible item of plastic that is labeled as a gift card. What about gift certificates, what about vouchers that are advertised and marketed as gift cards and gift certificates, what if vouchers are gift cards and gift certificates. We encourage direct language in the rule explicitly stating that deals that are marketed or advertised as gift cards or gift certificates are not vouchers.