Do You Charge Tax on Gift Baskets?

July 6, 2009 · Filed Under Industry Information

collect tax when you sell gift baskets New Jersey, the state in which I live and work, has a sales tax law that’s easy to understand. If you buy something to wear, there’s no tax. But if you cannot wear the product, tax is applied.

There is an exception with toilet tissue and other commodities, but what’s written above is the main rule. This is one reason why many New Yorkers drive across bridges and through tunnels to shop in New Jersey, as New York applies tax to everything.

Gift baskets are taxed in New Jersey. Even if a T-shirt or baby’s bib is included within the gift, the design’s total cost is taxed.

Gift baskets in your state are also a taxable product, but don’t take my word for it. Check your state’s sales tax law for details.

Go to your state’s official Web site, look for the search box (most state’s offer a search box on the site), and type the words “sales tax” in quotes as shown here. That will take you to the correct information, including how to collect and remit the amount due.

Another frequently-asked question about taxes is, “Who gets charged sales tax?”

If the client who orders also lives in your state, chances are that the order is taxed.

If the client does not live in your state, but the order is delivered to someone in your state, chances are that the order is not taxed.

If the client does not live in your state, and the receiver also does not live in your state, chances are that the order is not taxed.

New Jersey’s sales tax law may be basic enough to understand, but here’s one part of the sales tax that’s different than other states: shipping is taxed.

So, if a designer based in New Jersey creates a gift basket for a client who also lives in New Jersey, shipping through any carrier (the postal service, UPS, a courier, or you, etc.) is taxed. That’s the law.

Your state or country may have a similar law, which is why I encourage you to check your area’s official Web site to ensure that you know, once and for all, when to collect sales tax.

Your accountant can also provide details, and the frequently-asked questions section of GiftBasketBusiness.com reveals answers to other common dilemmas.

I’m not an accountant or a financial adviser, so it’s wise for you to seek an accountant’s assistance to learn about collecting and submitting sales tax.

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