Sometimes I do it and sometimes I don't. Today I was in a good mood and volunteered to round up for a children's hospital. It wasn't much but afterwards looked at my receipt and saw that the roundup was added to the total and then the whole thing was taxed. So apparently a donation is taxed by local and state governments ?

Donate the money yourself.

YouBet said:

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whoop1995 said:

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ac04 said:

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the retailers that do this donate all that money on their own behalf and then collect the tax break for themselves. total scam. just say no.

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Sort of but it's even worse - I have a franchise and my corporate office makes us do it. We collect from customers, corporate takes it from us and then the corporate office gets the charitable donation. For our business it goes down as an expense in quickbooks to corporate. We are a pass through and we pay the credit card charges since they take the entire amount "donated".

In my franchise the ceo is also on the board of the charity.

I do not agree with this at all at any stage and wish they would just get rid of it. Period.

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That's unethical as all hell.

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I'd be interested to know which company this is…

I always thought it originated so the POS software company could somehow make a minuscule more per transaction with no extra effort or input. I am a lay person though.

I always say that I don't donate to anything that I don't know how much the CEO makes of said 'charitable organization.'

It's always generic "children's hospital" and crap like that. Reeks scam. Probably going to LSU NIL

If the company is making a "donation", that also means the company is showing it as income when recieved - effectively washing it out. You have to view these arrangements as "partnerships" with the donee organization in the sense that they are arranging donations from the end consumer. The company is a pass through.

Also, sales tax shouldn't be charged on that - if it is, the POS is not set up properly.

In the situation above with the franchisee, the franchisee says he is writing a check to corporate. On his books, he is showing it as income when it comes in and expense when the check is written to corporate.

On the corporate books, they are showing it as franchise income coming in and a donation going out.

Actually the proper way to show it on both is a pass through a balance sheet account that does not hit the profit and loss at all, or at least that is how I would show it. I prefer this because in this situation, the franchisee and corporation are actually "fiduciaries " and have committed to funneling the money to the charity. You also want to do it this way to avoid franchise tax. If it shows up as income, it will be subject to franchise tax because donations are not deductible for franchise tax.

In both situations, though, there is no financial benefit to the franchisee or the corporation. In fact, the franchisee is actually damaged because they are incurring the credit card processing fee. The only benefit they get is good PR.

I would say on no direct financial benefit. But inflating your topline can still be helpful in many ways

shaynew1 said:

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I always thought it originated so the POS software company could somehow make a minuscule more per transaction with no extra effort or input. I am a lay person though.

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Restaurant POS softwares (like Toast) are pre-loaded with tipping options for this very reason. It's not because the restaurant owner wants you to tip their employees - it's because the credit card processor wants the processing fee for your tip.

You usually don't get the tip prompt on a cash sale.

ac04 said:

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the retailers that do this donate all that money on their own behalf and then collect the tax break for themselves. total scam. just say no.

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My mom was telling me recently about how she gave her niece (maybe 10 years old) some cash as a gift. The girl's mom then snatches the cash up and keeps it. She said "Well, I buy her plenty of stuff anyway, so I'll just use the cash for it."

So, kind of a similar scenario. Pissed my mom off.