I just got charged tax on Google Play cards. Is that right?

[KreepyKen]

For another example of this, consider Costco and Sam's Club. If you are a business (restaurant, vendor, etc.) and you buy merchandise at Costco that you will re-sell from your own business, then Costco does not collect tax on that merchandise. You show them your tax-exempt number, and they don't charge you for that stuff (they're supposed to charge tax for anything that isn't going to be resold) because you will charge the sales tax when you sell it to the final consumer.

For example, say you run a small shop. You go to Costco to get some supplies. While there, you get the following:

• Box of individually wrapped snacks
• Box of individually wrapped candy
• 42 cases of soda
• A TV for your customers to watch
• A package of receipt paper for your cash register

You are going to resell the snacks, candy, and soda, so you don't have to pay tax on them at Costco (you'll charge the tax when you sell it). You will, however, have to pay sales tax on the TV and the receipt paper because they are supplies, and you will not be reselling them. This ensures that tax will not be charged twice on one item...because double taxation is illegal.

 

[Srambo217]

Perhaps the clerk made a mistake? I'm not positive. I live in CA so I just assume I'm going to pay crazy taxes on everything I buy

Galaxy SIII
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[zapfrog]

In the US, you should absolutely NOT be paying sales tax on gift cards. They are not products for sale, merely an alternate form of currency accepted by individual or multiple stores. If you get charged sales tax on the gift card, then get charged sales tax on the item you buy with the gift card, you are essentially being taxed twice on one purchase...double taxation is illegal in this country (unless you're talking about inheritance...in which case double taxation is allowed for some reason).

Getting charged sales tax on a gift card is like going to the bank, asking the teller to break a $20 and only getting $19.50 back because of sales tax.

Let's look at an example: You get a $10 gift card at a store as a gift for Minerva. You get taxed, and have to pay $10.50 (5% rate). Minerva goes to that store, purchases something for $20. Tax is added, so she's paying $21.00. She uses the gift card, and has to pay the balance, which is $11. So the total paid is $21.50 ($10.50 from you and $11.00 from Minerva)...which means that the final tax on that item is $1.50...a 7.5% tax instead of the 5% it should be. That's illegal.

In order to charge tax on the card itself, then the store could only charge tax on the balance of the final sale...meaning that Minerva would take $10 off the top, be left with a $10 charge, to which tax is applied...equalling $10.50...plus the $0.50 you paid on the initial card. Then the tax would even out. BUT the problem with doing it this way is that each state has a different tax rate, so if a gift card is acquired in one state and used in another, then state #1 is getting sales tax for an item sold in another state...and state #2 is missing out on some of the sales tax generated. It's a mess.

So no tax is charged on a gift card. Tax is applied to the final sale so it only gets applied once and goes to the correct state.

So to make a long story short, you need to go to Target and talk to a manager to get your money back.

As a business owner I'll state it again: IT DEPENDS ON THE STATE. Even how fees are handled on gift cards differs from state to state.

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[xKrNMBoYx]

Sales tax in the US is a state-by-state thing, so what is taxable in your state will differ from my state. Here in Maine, gift cards of that type are taxable.

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OP basically said previously that itunes cards are not taxed. That means gift cards are not taxed, and his Google Play card should not have been taxed.

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[zapfrog]

States like CT have begun passing laws barring gift card companies from charging insane "dormancy" or "inactivity" fees.

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[rubrnek]

I've been both taxed and not taxed when buying Google play cards at the same target. I don't believe you are supposed to be taxed. I'm never taxed when buying PlayStation network cards at 7-11.

 

[PaulQ]

Thanks guys. I didn't mean to cause such a stir. I was just curious if anyone had or had not been taxed. It's less than 2 bucks but still surprised me. If I end up back at that Target in the next week, I'll ask the manager.

 

[meyerweb#CB]

Obama taxes everything!

Sales tax is by state, silly. And each state sets it's own rules on what's taxable and what's not, so someone's experience in a different state isn't relevant to Arizona.

 

[meyerweb#CB]

All your calculations are correct. Where you go wrong is saying "in the U.S." The US doesn't set rules on what is taxable and what isn't. Individual states do.

In the US, you should absolutely NOT be paying sales tax on gift cards. They are not products for sale, merely an alternate form of currency accepted by individual or multiple stores. If you get charged sales tax on the gift card, then get charged sales tax on the item you buy with the gift card, you are essentially being taxed twice on one purchase...double taxation is illegal in this country (unless you're talking about inheritance...in which case double taxation is allowed for some reason).

Getting charged sales tax on a gift card is like going to the bank, asking the teller to break a $20 and only getting $19.50 back because of sales tax.

Let's look at an example: You get a $10 gift card at a store as a gift for Minerva. You get taxed, and have to pay $10.50 (5% rate). Minerva goes to that store, purchases something for $20. Tax is added, so she's paying $21.00. She uses the gift card, and has to pay the balance, which is $11. So the total paid is $21.50 ($10.50 from you and $11.00 from Minerva)...which means that the final tax on that item is $1.50...a 7.5% tax instead of the 5% it should be. That's illegal.

In order to charge tax on the card itself, then the store could only charge tax on the balance of the final sale...meaning that Minerva would take $10 off the top, be left with a $10 charge, to which tax is applied...equalling $10.50...plus the $0.50 you paid on the initial card. Then the tax would even out. BUT the problem with doing it this way is that each state has a different tax rate, so if a gift card is acquired in one state and used in another, then state #1 is getting sales tax for an item sold in another state...and state #2 is missing out on some of the sales tax generated. It's a mess.

So no tax is charged on a gift card. Tax is applied to the final sale so it only gets applied once and goes to the correct state.

So to make a long story short, you need to go to Target and talk to a manager to get your money back.

 

[KreepyKen]

As a business owner I'll state it again: IT DEPENDS ON THE STATE. Even how fees are handled on gift cards differs from state to state.

No. You're wrong. We're not talking about fees...those are handled by the stores that issue them. The question was about sales tax.

No state charges sales tax on gift cards. Not one of the 50. New York would like to...but then purchases made with the gift card would have to be tax exempt. Why? Because we, as citizens of the United States, are protected from double taxation.

Another thing to consider...and a big reason why we don't get charged sales tax on gift cards...is that they can be used to purchase non-taxable items, like groceries and children's clothes. If you pay sales tax on a gift card that is used to purchase lettuce and bread, then you are paying a tax on items that are non-taxable. It's a freaking nightmare to sort out after the fact...so they just sell you a gift card for face value and let any applicable taxes be applied to the final sale. It makes the most sense, and is the easiest to manage.

 

[KreepyKen]

All your calculations are correct. Where you go wrong is saying "in the U.S." The US doesn't set rules on what is taxable and what isn't. Individual states do.

The protection against double taxation is federal. Yes, states set sales tax rates, and cities/metropolitan areas can append a small sales tax on top of the state one. But they cannot override the US Government's protections against doing it twice.

So my point is that as a US citizen, I cannot be charged sales tax more than once on any item. The tax is from the state; the protection from abuse is by the federal Government.

 

[pauldroidr2d2]

Maybe doesnt have a debit/credit card.
Umm im not sure but dont we pay VAT on playstore purchases using the normal way too?

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That's the first I've heard about that.

Sent from my Galaxy Note 2.

 

[pauldroidr2d2]

Thanks guys. I didn't mean to cause such a stir. I was just curious if anyone had or had not been taxed. It's less than 2 bucks but still surprised me. If I end up back at that Target in the next week, I'll ask the manager.

I think it depends on the state and local government for where you live.

I'm in CA, to my knowledge we are not taxed yet on them. But, who knows we air in this state. LOL

Sent from my Galaxy Note 2.

 

[Kizzmocat]

An item for sale is an item for sale, in California we have SALES TAX! This is why it is taxed, worse than your ideas of double taxation is the lottery, every dollar put in has been taxed, then if you win that money its taxed again at an even higher rate! How is this right? But there's nothing we can do about it, so i wake up every morning, go to work, get taxed, play the lottery, and hope t to good that i win!! I'll take 40 percent of millions any day! And think of how good I'll feel when i know the other 60 percent is going to help the schools and repair roads! Lol

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[funkylogik]

If you purchase an app right now in the normal way though, doesnt it add on VAT (value added tax)?
Maybe this just the same?

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[PaulQ]

Just as a follow up my question about whether or not anyone is getting charged tax...

Target (AZ) emailed me and said they made a mistake. They offered me a refund of the taxes (no plans to go to Target just for that). They thanked me for bringing it to their attention and said they fixed it in their system.

 

[Soundtrack to Chaos]

You don't get charged tax for Microsoft points...

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[funkylogik]

Just as a follow up my question about whether or not anyone is getting charged tax...

Target (AZ) emailed me and said they made a mistake. They offered me a refund of the taxes (no plans to go to Target just for that). They thanked me for bringing it to their attention and said they fixed it in their system.

Nice1 man.
Yeah i noticed when i bought an app lastnight, VAT is included in the stated price so you defo SHOULDNT be payin tax on top

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