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Giveaways and Charity – Taxable to the business!

Posted by salestax on March 11, 2008

So, you’re a business – big or small – and you offer incentives to your customers (buy 10, get 11th free, purchase $100, get $10 free merchandise).  Or you give away products to a non-profit charity.  One would think you wouldn’t owe the tax either way.  Think again… this is a sneaky way states cut further into your profits just because you’re trying to help the community and/or grow your business.

Herea fellow blogger talks about it as it related to Boulder, CO.  It affects more than small businesses, it affects ALL businesses in almost ALL states.  And it’s an area most businesses don’t think about recording.  The only good thing is that the taxes due are on the businesses cost to obtain those items, not the retail price.  But still, this can be costly.  The business’ attorney, however, has a great claim and if done right, should be able to help out the coffee store.  The charity donations… I’m not so sure.

Don’t even get me started on offering customers coupons, or if a customer uses a manufacturer’s coupon in your place of business.  We just love how the states make it as difficult as possibly to comply with all of these ridiculous laws.  No wonder many businesses fail.

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