While Amazon\u2019s policy is not to tax gift cards, as the practice is illegal, they have erroneously taxed gift cards in the past. This article will talk more about Amazon gift cards, their tax policy, and how to ensure you don\u2019t accidentally pay tax on your Amazon gift cards. Keep reading to find out more!<\/p>\n\n\n\n
Amazon Sales and Use Taxes<\/h2>\n\n\n\n
*Note: This article will cover Amazon tax and purchase laws within the U.S. Residents outside the U.S. may be subject to alternative sales and tax laws. <\/em><\/p>\n\n\n\n According to Amazon, when you purchase a gift card through their site, there is no tax<\/a> on that sale. However, when you use a gift card to buy an item on Amazon, the item is taxed. Further, that tax is included on the card when you purchase items with a gift card. <\/p>\n\n\n\n Within the U.S., all gift cards and gift certificates do not have a sales tax. While each state determines sales and uses taxes, no states currently allow sales tax on gift cards. In all instances of gift card purchases in the U.S., the gift cards are considered a cash equivalent and cannot be taxed.\u00a0<\/p>\n\n\n\n As a business, Amazon cannot directly charge sales taxes<\/a> on items. Instead, Amazon is subject to U.S. federal tax laws. In practice, Amazon applies taxes to its products which the government then collects. <\/p>\n\n\n\n However, in the U.S., tax laws are determined by each state. Amazon cannot set an overall tax rate on all its items. What Amazon can do is follow each state\u2019s tax laws to ensure the proper taxes are being collected. <\/p>\n\n\n\n Because individuals pay a sales tax when they purchase with the gift card<\/strong>, the gift card itself is exempt from any sales tax. However, when individuals pay a sales tax during a gift card purchase, the business recipient receives duplicate sales tax. <\/p>\n\n\n\n This extra sales tax is especially problematic because of the varying sales tax of each state government. For example, if you purchase a gift card with sales tax in Florida and spend that money in Alabama, each state would receive sales tax on the exact cash equivalent. <\/p>\n\n\n\n Sales taxes on items are reported to and collected by the state where individuals made the purchase. Businesses report sales taxes so the IRS can regulate where tax money goes. In situations where sales tax is charged on gift cards, it\u2019s unclear where that money is going because currently, no businesses report gift card sales taxes to the IRS. <\/p>\n\n\n\n While this is likely a mistake when it does happen, individuals should report instances of gift card sales tax. In addition to saving yourself money, you also help that business by ensuring they aren\u2019t committing fraud.<\/p>\n\n\n\n In general, if you buy something with a gift card on Amazon, it has the same tax as without. However, Amazon has a variable tax rate on all purchases that can change between when you make a purchase and when you\u2019re charged. <\/p>\n\n\n\n For example, purchases made out of state, and even purchases shipped from out of state, may have the sales tax of that state when you make a purchase. Then, after purchasing, the sales tax of the delivery state (where you reside) is applied to the order. <\/p>\n\n\n\n If you notice the tax on a sale change significantly after making a purchase, this is probably normal. However, contact Amazon customer service if you are concerned about discrepancies in the sales tax you paid vs. what was initially estimated. <\/p>\n\n\n\n While it\u2019s Amazon’s official policy not to charge, and despite this practice being illegal in the U.S., Amazon has charged sales tax on gift cards in the past. <\/p>\n\n\n\n It\u2019s impossible to quantify how much profit Amazon has made using this practice or how long they have been doing so. Further, it\u2019s possible that this practice was not intentional on Amazon\u2019s part. <\/p>\n\n\n\nWhat Are the Taxes on Gift Cards in the U.S.?<\/h3>\n\n\n\n
What Are the Taxes When Using a Gift Card?<\/h3>\n\n\n\n
Has Amazon Charged Gift Card Taxes in the Past?<\/h2>\n\n\n\n
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