Giveaways sometimes get away without sales tax

Article Abstract:

Companies that offer free goods to their customers should be aware that these giveaways actually entail sales and use taxation. Differences in the sales and use tax treatment of these items exist according to the type of property, the nature of the transaction and the states, although there are certain similarities. Companies that overlook this important aspect may be taxed more than is required or become the subject of expensive lawsuits. It should be noted that giveaways can actually be exempted from sales and use tax if it qualifies for resale exclusion. The tax treatment of such giveaways as bar snacks and matches, paper products, airline meals, hotels, telephone directories, promotional giveaways, prizes, cellular phones, free samples, catalogs, product tie-ins and fabric swatches are discussed.

Miscellaneous Store Retailers, MISCELLANEOUS RETAIL, Retail Trade NEC, Methods, Management, Retail trade, Sales tax, Tax exemption, Tax exemptions, Premiums (Retail), Use tax, Use taxes

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How to defer revenue from prepaid service income

Article Abstract:

The US Tax Court reached opposite conclusions in two very similar cases involving the deferral of income received from annual credit card fees. In Barnett Banks v. Commissioner, the Tax Court allowed the taxpayer to report income from the fees ratably over the 12 months following receipt. In Signet Banking Corp. v. Commissioner, the taxpayer had to report income in the year the annual fee was received. The distinction drawn by the Court appears to be based on the fact that the Barnett Bank credit card agreement provided for pro rata refund of the fee while the Signet fee was nonrefundable.

Commercial Banks, Commercial Banking, Bank Credit Cards, Banking industry, Cases, Credit cards, Accounting and auditing, Taxation of services, Service taxes

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Deductibility of private school costs for disabled children

Article Abstract:

The costs of children with disabilities such as attention deficit disorder attending private schools are deductible under IRC section 213 in cases where schools qualify as special schools described in IRS regulation 1.213-1(e)(1)(v)(a). Schools must be attended principally for medical reasons. Meals and lodging are inclusive deductible expenses if they are provided as necessary incidents to the medical care. Judicial opinions demonstrate that qualifying rules for such schools are strictly construed.

Public Finance Activities, Tax Deductions & Exemptions, Care and treatment, Laws, regulations and rules, Finance, Education, Disabled children, Tax deductions, Attention-deficit hyperactivity disorder, Attention deficit hyperactivity disorder, Private schools

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