Archive for January, 2011

Retailers gained a major victory this month when the IRS announced that proceeds from the sale of gift cards does not have to be counted as taxable income until they are redeemed even if they were sold through a subsidiary or franchise.

Retailers who issue gift cards in place of refunds may also defer any income associated with the original sale.

This means that any money received as the result of the sale of gift cards need not be declared as long as those gift cards can be redeemed for merchandise from the company that issued them.

As a reminder, you should check all the facts with your Accountant or CPA.

Sources: National Retail Federation, Accounting Today