Are gift certificates subject to sales tax?

The purchase of a gift certificate is not subject to sales and use tax. The gift certificate is deemed to be consideration at the time it is redeemed by the retailer.

The sales or use tax applies to the total sales price for the purchase of taxable merchandise when the gift certificate is redeemed by the retailer.

When you buy a gift certificate for say $100.00, it is basically the same a giving the store 5 $20.00 bills in exchange for a $100.00 bill. This should not be a taxable sale. California may not agree with me on that point. The website below my help.

http://www.boe.ca.gov/sutax/sutprograms.htm

No, they cannot tax you on gift certificate sales, but you are taxed when you use the gift certificate for purchasing taxable good and services. Te distinction being if you were able to purchase a non-taxable good (I don't think there are any in CA, but in PA and other states, clothing is tax exempt), you wouldn't pay tax on it, so charging tax on the card wouldn't be equitable.

When you buy something with the gift certificate they charge you tax on the item.

no. there is no sale so there is no sales tax. the actual sale happens when the person uses the gift certificate and the total is taken from it.

No they are normally not subject to sales tax...but not sure in Cali

Generally no because when they are spent you pay tax on the goods.

not when you purchase the gift cert. itself but when one uses it their items are taxed. So no the gift cert. isn't the merchandise is

On purchase of GC - no. On use of GC - yes.

no its considered a gift