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Hello, I am a new owner of a beauty salon in NYC. The previous

owners were in past offering...
Hello, I am a new owner of a beauty salon in NYC. The previous owners were in past offering deals in discount websites like Amazon and Living Social, when the purchaser pays directly to the Website, and the Website then sends us a prorated check, taking a certain percentage of the money that they have received from the purchaser. Client is responsible for paying only tax at my salon. My question is, in the state of New York, do they have to pay tax on the amount of money they purchased the deal for or the amount of money my salon receives from the discount website?

Thank you!
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Answered in 17 minutes by:
8/26/2013
DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 794
Experience: Years of Experience in Business & Personal Taxes
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Welcome and thanks for your question!

The answer is it depends on whether the customer is purchasing a service or a product with the deal coupon.

If the customer is purchasing a deal for a specific product or service subject to tax (e.g. a manicure), then sales tax is only due on the amount the customer purchased the deal for.

If the customer is purchasing a deal for a stated value (e.g. $50 value purchased for $25), then sales tax is due on the full amount of the taxable products sold/services rendered.

The amount of money that your salon receives from the website is not relevant in the determination of how much sales tax the customer should pay.

New York issued a fairly in-depth Techinical Memorandum on the subject that you may wish to consult for further reading. Also, here's a nice summary guide to taxable and nontaxable salon services.

Please let me know if you need clarification or have any further questions on this subject. If you are satisfied with this service, please accept this answer with a positive rating. Have a wonderful evening and good luck with your new business!
DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 794
Experience: Years of Experience in Business & Personal Taxes
Verified
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