March 27, 2012
24 States Move Towards Taxing Groupon
Forbes, 24 States Moving Towards Decision on Taxing Groupon, LivingSocial Deals, by Janet Novack:
When you use a daily deal coupon from Groupon, LivingSocial or Amazon.com’s AmazonLocal at a neighborhood store or restaurant, what amount should you pay sales tax on? The face value of the coupon? Or the far smaller amount (typically 50% of face value) you paid for your deal when you bought it on the Internet? The answer matters to consumers, local merchants and the daily deal industry. Say you pay $50 for $100 worth of goods. With local sales tax rates now averaging 9.6% nationwide according to Vertex, Inc., imposing the tax on the full $100 would add $9.60—or 19.2%—to the cost of a deal, reducing its appeal.
More than a year ago, I reported that the states, by and large, had yet to consider how to tax the burgeoning deal-of-the-day business. Now the 24 states that are part of the Streamlined Sales Tax Use Agreement are devising a uniform policy—one that the group’s Governing Board could adopt as early as its next meeting in late May.
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