Gift cards and sales tax: How not to get duped
The Christian Science Monitor - 08/26/2014
Gift cards are a versatile gift for the recipient — and a convenient and easy purchase for the giver. They can even make a smart purchase for yourself, as with iTunes gift cards, which are almost always on sale.
Part of that convenience of gift cards is that they are tax free when purchased. But some retailers are breaking state and even their own rules on the matter, or finding loopholes, as we learned from some of our readers. If you’re not careful, you could end up getting taxed twice.
While these rules are not federally mandated or explicitly spelled out in every state, we outline the best evidence we could find on tax-free gift cards, and tell you how to handle retailers that ignore them.