How does Best Buy get away with charging tax on reward points?

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Solid-Snake-Eyes

Solid-Snake-Eyes

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I just bought a $20 game and used a $10 rewardzone certificate. They charged me tax on the $20. Reward points aren't real, they're made up. BB is selling me the game for $10, not $20. I'd feel bad for people who've built up huge amounts of rewardzone points (if that's even possible) and then get taxed on those. This is wrong, correct? Or am I missing something...
 
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I don't know what the laws are regarding gift cards and taxes or whatever, but whether or not Best Buy is making an oversight, you can take comfort in one thing: they're not making any extra money. If it just so happens they ARE over-taxing you, the money isn't going to them. It's taxes, so it's government. They have no reason to 'grift' you on sales tax, so at least it's not a malicious act.
 
Tax is almost always applied prior to any price reductions of any form.
The 10 Reward points is not getting taxed, the game is just being taxed at it's full price before the 10 dollars off is applied.

Blame the governments not BB for this.
 
But this isn't like a gift card you bought with money. They're basically saying you're a good customer, we'll sell you the game for $10 off. But we're gonna tax you on the full price anyway. As far as I'm concerned I never bought a $20 game, I bought a $10 game. Basically what I'm saying is the $10 reward points never existed as cash, it should be treated like a sale and not credit. If a game is on sale for $10 off you don't pay tax on the full price. Maybe I'm off base but it just seems wrong.
 
[quote name='Placebo']Yeah, the only store I know of that doesn't charge tax on rebates/rewards/store credit is EBG/GS.[/QUOTE]
If you buy something and trade something in the same transaction at Rogers they don't tax the new item, but other than that I think you're right.
 
The reward zone certificates are $10 off an entire purchase, not a specific item.

If it were a specific item, it would be applied before taxes to that item. That is a sale.

But because it's for an entire purchase, it's not, as an entire purchase includes applicable taxes. So you're charged full price + tax, and then the $10 is taken off. It's like using a gift card. Gift cards aren't taken off before taxes.

Trade-in credit is, because you already paid taxes on the items you traded in to get that credit in the first place. This is why taxes aren't charged on items you purchase entirely with trade-in credit. You'd be getting taxed twice. Think there's a law against that.

Anyways, Best Buy's policy with the RZ certificates is totally fair. You aren't being screwed over in any way.
 
certificate = gift card = asset

Regardless of the way you cut it... the certificates are just like a 10 dollar bill. Think of amazon gift certificates. They are the same way. How can you say the points are a joke? Like seriously... you caved 10 dollars just now, quit complaining as there is nothing here to complain about.
 
[quote name='Solid-Snake-Eyes']I just bought a $20 game and used a $10 rewardzone certificate. They charged me tax on the $20. Reward points aren't real, they're made up. BB is selling me the game for $10, not $20. I'd feel bad for people who've built up huge amounts of rewardzone points (if that's even possible) and then get taxed on those. This is wrong, correct? Or am I missing something...[/QUOTE]

Do you not understand what a gift certificate is? Its a set dollar amount you get free, off your total. GC or not the damn game still its original price and is still taxable.

Its the exact same thing as if you went to pay for it, the cashier rings it up with tax (as anyone sane person would expect) and a friend with you gives you 10 dollars to use to help pay for it. Would you expect the cashier to say "Oh well since that person is giving you 10 dollars Ill make the register magically not charge tax on 10 dollars of the items cost since your not using your own personal money"? No you wouldnt, atleast if you had a functional brain you wouldnt. And thats the exact same thing you do with a GC.

Only time taxes and GC's dont go together is when you BUY a GC, because then you arent buying a product, your just turning cash from one form into another. But when you use a GC its as good as cash for a item, meaning its good off your total and the key word is "total" meaning after tax is added.

If people could avoid paying taxes by only using GC there wouldnt be any cash in this world at all, no checks, no credit cards in stores at all because everyone would buy everything with a GC so they didnt have to pay tax.

My brain hurts at the idea of a person who cant understand this.
 
[quote name='Steggy']certificate = gift card = asset

Regardless of the way you cut it... the certificates are just like a 10 dollar bill. Think of amazon gift certificates. They are the same way. How can you say the points are a joke? Like seriously... you caved 10 dollars just now, quit complaining as there is nothing here to complain about.[/QUOTE]

I recently used something similar at my Wal-Mart. It was a $10 Kellogg's Bonus Bucks certificate. Instructions on the document had the cashier process it as a check. It was as good as cash on the qualifying purchase.
 
[quote name='gargus']Do you not understand what a gift certificate is? Its a set dollar amount you get free, off your total. GC or not the damn game still its original price and is still taxable.

Its the exact same thing as if you went to pay for it, the cashier rings it up with tax (as anyone sane person would expect) and a friend with you gives you 10 dollars to use to help pay for it. Would you expect the cashier to say "Oh well since that person is giving you 10 dollars Ill make the register magically not charge tax on 10 dollars of the items cost since your not using your own personal money"? No you wouldnt, atleast if you had a functional brain you wouldnt. And thats the exact same thing you do with a GC.

Only time taxes and GC's dont go together is when you BUY a GC, because then you arent buying a product, your just turning cash from one form into another. But when you use a GC its as good as cash for a item, meaning its good off your total and the key word is "total" meaning after tax is added.

If people could avoid paying taxes by only using GC there wouldnt be any cash in this world at all, no checks, no credit cards in stores at all because everyone would buy everything with a GC so they didnt have to pay tax.

My brain hurts at the idea of a person who cant understand this.[/QUOTE]
Thanks for the kind words. What's bugging me is this damn points card was never cash. Gift cards are bought with cash. This certificate was free. I can see I'm pissing people off by questioning this so I'm going to drop it.
 
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