SALT Report 1679 – The Washington Department of Revenue issued a notice regarding the taxability of discount, or deal-of-the-day vouchers. As a general rule, if a customer redeems a discount voucher when purchasing a product or a retail service, the retailer is required to collect retail sales tax based on the total amount paid for the voucher, plus any other consideration received by the seller.
Discount vouchers are taxable as follows:
- If the discount voucher is redeemed for a product that is subject to retail sales tax, the amount paid by the customer is included in the product’s taxable sales price.
- For business and occupation (B&O) taxes, the retailer must include the amount the customer paid for the discount voucher in the gross proceeds of sales or gross income of the business.
- The purchase of the discount voucher prior to redemption is not taxable.
Sellers must document the amount the customer paid for the redeemed discount voucher and any discount applied to the sale. If, at the time of sale, the seller does not know the amount paid for the discount voucher, the seller must treat the amount paid by the customer as equal to the face value of the voucher.
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