City and County of Denver, Colorado

TAX GUIDE

Topic No. 38

GIFT CERTIFICATES

 

The sale of a gift certificate is the sale of an intangible "right" to exchange the value of the certificate for goods or services. As the sale of an intangible, it is not subject to sales or use tax.

 

A taxable transaction occurs when the certificate is used to acquire tangible personal property. Upon redemption or exchange of a gift certificate for tangible personal property, sales or use tax is due on the total sale price of the tangible personal property.

 

The vendor selling gift certificates is liable for the sales or use tax on the printing cost or purchase price of the actual certificates, as the physical certificates are tangible personal property not for resale.

 

EXAMPLE

 

A person purchases a tie that costs $25 by using a gift certificate worth $15 and pays the balance in cash. Tax on the transaction is applied to the full $25 sale price.

 

 

 

* DRMC Section 53-25(1). Imposition of tax.

* DRMC Section 53-96(1). Imposition of tax.

 

 

 

THE ABOVE INFORMATION IS A SUMMARY IN LAYMAN'S TERMS OF THE RELEVANT DENVER TAX LAW FOR THIS INDUSTRY OR BUSINESS SEGMENT. IT IS NOT INTENDED FOR LEGAL PURPOSES TO BE SUBSTITUTED FOR THE FULL TEXT OF THE DRMC AND APPLICABLE RULES AND REGULATIONS.

 

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