Overview
The IRS is aware that the popularity of gift cards has increased at a remarkable rate in recent years. Gift card sales by retailers raise a variety of interesting and complicated tax issues. The IRS has announced that certain gift card issues are Tier II issues; some of which must be raised during an examination and some of which should be raised during an examination. The IRS announced, in several industry director directives, that it plans to focus on several specific issues in this area. Despite this emphasis on gift card revenue issues however, the IRS has provided little guidance in this area. The sale of gift cards also raises a variety of state tax and state law issues.
This OnDemand Webinar will help you identify and handle the numerous federal and state tax issues surrounding the sale of gift cards. Specifically, this program will provide you with insight as to the various issues of concern for the IRS and the IRS’ current thinking in connection with these issues. You will gain an overview of strategies used by retailers for minimizing unclaimed property reporting obligations related to gift cards and similar items.
Authors
Ellen Fitzpatrick, Grant Thornton LLP
Chris Hopkins, Grant Thornton LLP
Richard Shevak, Grant Thornton LLP
Self Study Credit - OnDemand Webinar
| CLE | 1 | PA | |
| CLE | 1.48 | TN | |
| CLE | 1.5 | AK, AL, AZ, CA, HI, IL, MS, MT, NC, ND, OR, VA, VT, WA, WI | |
| CLE | 1.8 | MO, WV | |
| CLE | 2 | CO | |
Self Study Credit - CD & Reference Manual
| 0 | 0 | AZ | |
| CLE | 1.5 | AK, CA, GA, HI, ME, MT, ND, NV, OR, UT, VT, WA | |
| CLE | 1.8 | MO, WV | |
| CLE | 2 | CO | |
Self Study Credit - Podcast
| CLE | 1.5 | AK, CA, ME, MT, ND, NV | |
| CLE | 1.8 | MO, WV | |
Agenda
Deferral of Gift Card (Certificate) Revenue
- General Rules for Deferral (Rev. Proc. 2004-34./Treas. Reg. 1.451-5)
- Part A Issues Raised by Industry Director Directive #1
- Issues Surrounding the Use of a Gift Card Subsidiary
Other Issues Raised by Industry Director Directives #1 and #2
- Treatment of Gift Card Revenue as a Deposit
- Gift Cards Given in Exchange for Returned Merchandise
- Dormancy Fees in Connection With Gift Cards
- Escheatment to States
- Estimated Cost of Goods Sold Under Treas. Reg. 1.451-5
Unclaimed Property Issues Related to Gift Cards
- Overview of State Jurisdictional Rules
- Benefits of a Gift Card Subsidiary
- Choice of Domicile
- Typical Gift Card Subsidiary Structures and Alternatives to a Separate Entity
- Breakage Income Recognition
State Tax Considerations
- Domicile and Legal Form
- Nexus
- Income Apportionment
