I don't know about other states, but I've had direct experience through my job with Massachusetts tax law requirements surrounding internet purchases. Massachusetts requires that you pay state tax on anything considered to be "tangible personal property" with a list of exemptions you can find here: Tax Exempt Items (http://www.mass.gov/?pageID=dorterminal&L=6&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Forms+%26+Publications&L4=Publications&L5=Publications+Index&sid=Ador&b=terminalcontent&f=dor_publ_sales_use&csid=Ador#exempt) Sales of gift certificates/cards are specifically addressed in a letter ruling(Letter Ruling 81-4 (http://www.mass.gov/?pageID=dorterminal&L=8&L0=Home&L1=Businesses&L2=Help+%26+Resources&L3=Legal+Library&L4=Letter+Rulings&L5=Letter+Rulings+-+By+Year(s)&L6=1984+and+Prior&L7=1981+Rulings&sid=Ador&b=terminalcontent&f=dor_rul_reg_lr_lr_81_4&csid=Ador)) and ruled nontaxable based on the definition in MGL Chapter 64H, Section 1(15) that specifically excludes "rights and credits" and goes on to cover that the sales tax will be paid on the goods you purchase with the certificate. The same rules apply to purchases from the internet. For instance, if you purchase software that you download, Massachusetts doesn't require you pay a tax on it because it isn't considered a tangible good. If you get the same software shipped to you on a disk, you would have to pay the sales tax. Even though you are getting a tangible gift card, it isn't considered a tangible good.
Long explanation short: There is no reason for you to be charged Mass sales tax for the gift certificate, even on the basis that they have stores in Mass. It sounds like either a poorly designed checkout interface or someone is trying to take advantage of people not picking up on it...keeping in mind, of course, that I don't necessarily know the state tax law for the state from which you are receiving said card, but can't see any reason they would require charging Mass state sales tax.
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Date: 2009-11-19 08:31 pm (UTC)Long explanation short: There is no reason for you to be charged Mass sales tax for the gift certificate, even on the basis that they have stores in Mass. It sounds like either a poorly designed checkout interface or someone is trying to take advantage of people not picking up on it...keeping in mind, of course, that I don't necessarily know the state tax law for the state from which you are receiving said card, but can't see any reason they would require charging Mass state sales tax.