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Positive Week 3

   
Same store sales were up 0.86 percent in the third week of July, according to independent grocers despite the fact that customer counts were down 0.04 percent.

Tomorrow the Bureau of Labor Statistics releases its July unemployment report. The last two months have been quite the ride, with May one of the worst reports in recent memory, followed up by June, which was one of the best. Initial estimates put July firmly in between these two reports, making for a decent, but not great month. We’ll see how close the final report from the BLS comes to these predictions.

Same Store Sales        
% Change from last year

Same Store Sales – Previous Months

Registration Open for NGA Fall Programs, co-sponsored by FMS

   
The National Grocers Association (NGA) and FMS have announced the details for its fall programs. NGA's Financial Management and Technology Conference will meet in conjunction with Trading Partner Business Sessions Program this October 4 – 7 at the Palmer House Hilton in Chicago, IL.

Sponsored by First Data and FMS, the NGA Fall Leadership Meetings will provide attendees with four days of educational sessions pertaining to financial and technological issues and high level networking opportunities.

For more information and to register, click here.


BGBC Partners, LLP Tax Update: Update on Unredeemed Gift Cards

As a store owner, you are aware that gift cards can be great for your customers and therefore great for your store.  According to a study conducted by consulting firm CEB, consumers spent over $130 billion on gift cards, while close to $1 billion remained unused.

In a Tax Update column during the holiday season last year, we discussed the general rules pertaining to unredeemed gift cards.  Since that time, the IRS has issued new guidance relating to gift cards.
 
How does this new guidance affect your store’s gift card program? That is the topic of this week’s Tax Update.
 
The IRS takes the position that gift cards are treated as “advanced payments”, which are generally recognized as taxable income in the year the cash is received from the customer. Without relief, this rule might discourage retailers and stores from selling gift cards.
 
The IRS recently issued new guidance in TAM 201610017 which states that a company can defer income, for up to two years, from the sale of unredeemed gift cards for goods and delivery services to the extent it can appropriately estimate the amounts that are deferrable.  For example, if a customer purchases goods from your store, and wants to have the goods delivered to their home or place of business, the cost you charge for the delivery service can also be placed on the card and can be deferred for up to two years.
 
In Revenue Procedure 2011-18, the IRS stated that unredeemed gift cards may be deferred if the following conditions are met:
(1)  The taxpayer is primarily liable to customer (or gift card holder) until redemption or expiration
 
(2)  The gift card is redeemable by the taxpayer or by any other entity that is legally obligated to the taxpayer to accept gift cards from the customer as payment.
The general deferral period is one year, however, the two-year period may apply under certain conditions.  These rules can be very complex and fact-specific.
 
In general, we wanted to make you aware of this new guidance which also includes services such as delivery services as items deferrable for up to two years under a gift card program.
 
As you can see, these rules are tricky and are stated in various regulations and rulings.  If you are thinking of initiating a gift card program, or have a gift card program in place, but are unsure if you are complying with the tax laws, we recommend that you consult with a qualified CPA.
 
What we don’t want to do is to give the IRS the free-gift of paying your taxes sooner than you needed to!
BGBC Partners, LLP is a full service certified public accounting and business consulting practice.  

For more information, contact
Brad Bell, CPA or Steve Reed, CPA/ABV/CFF at BGBC Partners, LLP (317-633-4700).
For More Information,
Contact Mark Ehleben
877-435-9400 x1402
marke@fmssolutions.com
8028 Ritchie Highway | Suite 212 | Pasadena, MD 21122


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