As the Lobby group for many major retailers such as Nordstrom, Barnes & Noble and Dick’s Sporting Goods, to name a few, the National Federation of Retailers has been lobbying for a tax rule change surrounding gift cards and how the revenue derived from there purchase are accounted for in a retailer’s tax filings. The N.R.F. had brought to the attention of the I.R.S that the current rules on how to account for gift cards bought in one year and redeemed in another, have caused confusion and thus resulted in retailers coming under increased audits. Earlier this week, the I.R.S. agreed with retailers and has changed how this accounting can be handled. The new rules now allow for the deferment of taxable income from gift cards until such time that they are redeemed.
READ THE ENTIRE ARTICLE by Richard Rubin of Bloomberg