Deal of the Day raises state tax and unclaimed property issues

Retail & Consumer Products Quickbrief

"Deal-of-the-day" offerings are a relatively new, yet increasingly pervasive, method for retailers to reach potential customers and grow their businesses. Typically, the "deal" is offered by companies ("Deal Companies") for sale to the general public in the form of online coupons ("Deal Coupons") that provide significant discounts (e.g., 50%) at local and national retailers. While the arrangements vary, the Deal Company may commonly retain up to 50% of the amount paid by the customer for the Deal Coupon, with the remainder remitted to the retailer. These offerings raise a number of state tax issues, spanning direct taxes such as gross-receipts-based taxes, to indirect taxes such as sales and use taxes. Further, these offerings may raise significant abandoned and unclaimed property concerns.

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