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Gift Certificates

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athomeinthewoods

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My wife and I recently opened our b&b. We just started selling gift certificates. My question is; should all taxes be charged on top of the specified gift certificate value or are the taxes included in the specified certificate amount. How do you do it?
Thanks in advance!
 

agoodman

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If you collect taxes at the point of selling the GC you may be required to PAY those taxes to local or state AT THE TIME OF THE SALE OF THE GC and not at the time the "room is consumed"
Something you may want to check
There are LOTS of new rules about GC and lots of threads on this website's forums so take a look at those
 

Samster

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This is why we only sold gift certificates in a dollar amount. Then, when the room was booked the guest would pay any difference in the room rate and any applicable taxes at that time. I did it that way because our sales tax changed 4 times during the time we were open over 2 years!!! Also, we've discussed how selling gift certificates for a "one night stay" can be problematic if you increase your room rates.
And when we closed, all I had to do was refund any outstanding gift certificate amounts to the purchaser. For me, it was simpler accounting.
 

Alibi Ike

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Just do the GC for a specified amount. $100 or some such. The guest will then pay the difference, including the tax. Tax is not generally charged on a GC. I.E.- you purchase a GC at the store for $100, you do not pay tax on it. The tax comes about when it is used to buy something.
 

JBloggs

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You are selling a room so include the taxes, as the taxes have to be paid. or sell it for a dollar amount, ie $250 toward a stay at your B&B.
At our place I sell rooms or choice of rooms much more than dollar amounts, as typically a gift giver doesn't want the $ showing on the GC when the recipient opens it. Sometimes I can include add on items like flowers. But the $ amount vs a room or rooms IS a better way to go.
Welcome to the forum!
 

Breakfast Diva

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What part of the country are you in?
We sell GC for the dollar amount. We claim the revenue (IRS, State) in the tax year it was sold, they when they stay, the room tax is paid.
 

Alibi Ike

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You are selling a room so include the taxes, as the taxes have to be paid. or sell it for a dollar amount, ie $250 toward a stay at your B&B.
At our place I sell rooms or choice of rooms much more than dollar amounts, as typically a gift giver doesn't want the $ showing on the GC when the recipient opens it. Sometimes I can include add on items like flowers. But the $ amount vs a room or rooms IS a better way to go.
Welcome to the forum!
.
I agree it looks a lot nicer to specify 'One night's stay at...' rather than $$$. Have been burned too many times by guests selecting the room they want and then arguing their GC states 'one night' not 'one night in the cheap room' (which is what their family wanted to pay for) so they don't want to pay the difference and get upset. If it's $10, I won't argue, but most of them go for the $50-$75 higher room. I used to specify a particular room and then would have to explain to the guest they could pick whatever room they wanted but the GC covered that level of room.
I tried at first to suggest the buyer spend a little more to cover in season rates but they only want to pay off season. And the guest always wants to come in season. Amazing. There are 4 in season months and 8 off season months and the guests always want those in season months.
I have one stupid GC outstanding where the person who bought it wanted it for a specific 2 week time frame off season where I had posted a half-off special. Did their recipient show up in that 2 week time frame? Of course not.
And then there are the ones who wait 5 years to spend their GC. The room that was $125 5 years ago is now $175. And they'll never come back so it's not like I'm ever going to recoup that money.
I know you said the $ amount is better, just explaining why is true here.
 

Copperhead

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Glad you have joined in the fun!
I sell by $ amount and do not collect tax until it is used. Check with your state just to make sure how you should handle it, some states laws differ from others. And while you are at it, check the laws regarding the polices of use of the certificate - laws have changed and states may differ on this as well.
I use to sell by room (well room type) here but ran into some stumbling blocks where someone wanted to use their high end GC in a lower priced one and then wanted to take the extra to spend on extras... Too many issues with that so I changed to Dollar amounts - with so many purchasing Gift cards these days I do not see the big advantage of not putting the $ on the certificate. Besides all that they have to do is check online or call and find out what the value is for any certain room.
 

bbinnsitters

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Are you in any way related to the At Home in the Woods Furniture place in NY? Absolutely beautiful furniture! I was there last year, but didn't know there was a B&B (if in fact you are related!)
 

egoodell

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We pay the tax when we sell it. I don't have the time to keep track. We number them, date them, and note that there are no expiration dates, and the value of the gift is protected against any rate increases for one year. That way if it's for a room stay and not an amount of money, we can charge them the difference if they use it years down the road.
RIki
 
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