Unused Gift Card Balances

reginahcbireginahcbi Member Posts: 1

What are other retailers doing with Gift Cards that are unused? We have gift cards that are at least 3 years old, unused. These are from our early days as a new retailer and we were not diligent in collecting customer information. Any suggestions?

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1 comment

  • RainflurryRainflurry Member Posts: 30

    @reginahcbi


    There's nothing to do in Lightspeed, they just sit there unused.

    From an accounting perspective, there is some variation on the proper way to handle the advance payment for gift cards. Treasury Reg. §1.451-4 states that you can defer the income until the earlier of when a cardholder uses the card or the end of the second tax year following the year of the card purchase. However, the IRS has stated in Rev. Proc. 2004-34 that a taxpayer is allowed to defer the advance payment to the extent it is deferred for financial statement purposes in the year of receipt, but must include it in gross income in the succeeding tax year. So, it's certainly safe to defer unused gift cards sold in 2022 until the end of 2023, but it is probably fine to defer them until the end of 2024.

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