Retailers claim state may lose money on gift cards
Retailer organizations Wednesday released the results of an analysis of the sales tax impact of a new law that allows New Jersey to collect any unused funds left on a gift card and it showed that the state might lose more in tax revenue than it will collect as disgruntled card companies withdraw from the market.
American Express, InComm and Blackhawk Network last week said that they will no longer sell gift cards in the state because of the amendment to the unclaimed property law. The New Jersey Retail Merchants Association and the Retail Gift Card Association expect other issuers will follow and that merchants will lose sales as a result. The groups estimated New Jersey’s potential annual loss of sales tax revenue at $64 million to $94 million.
The law permits New Jersey to collect any unused funds left on a gift card after two years from the last use of the card. The legislation has not been enforced because the merchants association and an American Express division brought an injunction that prevented the law from being implemented. That injunction was lifted last month.
John Holub, president of the New Jersey retailers group, which objects to merchants being required to collect ZIP codes from customers to help the state collect the unused card balances, said “the law comes at too great a cost for businesses to comply” and “may also come at too great of a cost for the state to implement.”
