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Gift Certificate Sales and Tax

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JBloggs

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Can you refresh me again how you all pay the tax on gift certificate sales in a dollar amount? I usually sell rooms or groups of room choices plus addons, and my GC sales STUNK this December! So when I sell the rooms I collect the full amount including the tax.
So for one GC in a dollar amount of $250 do you pay the tax when it is redeemed? Or up front as it is sold in the month sold?
 

Don Draper

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We always pay it as it is redeemed, but then we do dollar amounts and not "stays".
 

Alibi Ike

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Dollar amounts on the GC do not include room tax so I collect the room tax when the GC is redeemed and claim it then.
A $250 GC sold today would not show up on my room tax report for January or get paid to the state until someone showed up with that GC in hand and used it.
 

Samster

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I did it the same way that Alibi does it. Think about how it works when you buy a gift card or certificate. You are not charged any sales tax at the time you buy them. The sales tax is paid when the card is redeemed for the services. This is why I always sold gift certificates for a dollar amount, rather than a "stay" or room night, so that it would not be confusing to the person redeeming the gift certificate.
 

agoodman

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You would enter the payment for the GC as an "advance" deposit which is a liability on your books and for which you should (should ...) declare as a liability when you do your taxes
Your "revenue" is only "rung up" when you make the sale, room charge, taxes etc, so that should be the month you declare the taxes .. however there may be some funny regulations in your state or county so thats not "set in stone" but it is basic "hotel" accounting principles
 

Breakfast Diva

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Dollar amounts on the GC do not include room tax so I collect the room tax when the GC is redeemed and claim it then.
A $250 GC sold today would not show up on my room tax report for January or get paid to the state until someone showed up with that GC in hand and used it..
Ditto
 

Baygirl

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When we sell a gift certificate we give them the option of paying a dollar amount or if they don't want their recipient to pay anything when they stay we add the tax into the sale amount. It works out well. I would say more times than not the buyer pays for room and tax. Then we break it out when gift certificate is redeemed.
 
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