Tuesday, October 30, 2007
I previously blogged the tax consequences of the latest example of refunds tied to a local sports team's success: Jordan's Furniture in Boston ran a "Monster" promotion promising that customers who purchased furniture between March 7 and April 16 would have their entire purchase price refunded if the Red Sox went on to win the 2007 World Series. Jordan's has said all along that any refund would be taxable to the customers:
Per IRS regulations, Rebate Claim Forms valued at $600.00 and above will be issued a 2007 1099 Form from Jordan’s Furniture and will be reported to the Internal Revenue Service.
The Boston Globe reports today that Jordan's is checking with its tax lawyers to find a way to avoid sending 1099s to their customers:
Jordan's ... is also trying to figure out if the deal can be sweetened even further. Tatelman said his lawyers are investigating whether the payments to customers are taxable. Jordan's had planned to report the payments to the Internal Revenue Service and send the customers federal 1099 tax forms, but Tatelman said that may not be necessary. "It's really a rebate. It's not a prize," Tatelman said, although some critics have argued that the Jordan's promotion is actually an illegal lottery.
Jordan's Knows Cost of Victory Full Well, by Bruce Mohl. (Hat Tip: Eric Lustig.)