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New Rules For Gift Cards Go Into Effect
The Wi-Fi Wars and Your Restaurant (Revisited)
The Bagel Tax is Back
New Federal rules involving the sale of pre-paid gift cards and incentive offers went into effect on Sunday (August 22, 2010).
The new rules are supposed to protect consumers who are increasingly buying gift cards. The sale of gift cards by restaurants rose by 12.4% over the past year according to First Data Corp.
Under the new gift card rules, gift cards must be good for at least five years. The new rules place limits on dormancy or inactivity fees. Generally, fees can only be charged on cards that have been inactive for at least 12 months.
The above rules are rather straight forward, but it gets more complicated.
Gift cards given as part of a promotion have different rules. For example, if a restaurant or retail store gives out a $15 gift card with the purchase of $100 or more, this gift card may have fees and an expiration date of one year, rather than five.
Similarly, a gift card offering a free meal or other item is exempt from the rules as long as it does not mention a specific value.
Businesses must also be careful of following state laws. Many states have more stringent laws than the new Federal law. Businesses are required to follow the more stringent state law in their state (should such a law exist).
You can read the complete article which applies to all businesses in Nation's Restaurant News at:
Some of our valued customers and readers hammered me for last week's article about the Wi-Fi Wars.
Last week, I mentioned that Starbucks and McDonald's have been very successful by offering Wi-Fi (wireless access) to its customers. I also mentioned that some restaurants prefer not to offer Wi-Fi because some of their customers are taking up valued seating during the busiest times of the day.
All well and good. I did not recommend nor did I not recommend the use of Wi-Fi. I just wanted to discuss the pluses and minuses related to offering Wi-Fi in your restaurant.
Everyone appeared to be fine with that part of the article.
Some readers objected to my statement that any restaurant can buy a $100 wireless modem and set up a Wi-Fi system within their restaurant. These readers are 100% correct. Setting up a Wi-Fi system in your restaurant (should you chose to do so) is far more complicated.
It is correct that anyone can easily add a $100 Wi-Fi Wireless Router to your present internet connected business computerized system. It would just not be a wise thing to do.
You need to think about its security. When you set up a Wi-Fi system, you need to make sure that it is password protected. If you don't add the correct level of security, anyone can get into your computer system and business records.
Even if you are computer savvy enough to properly secure your Wi-Fi system, your system may not be PCI compliant. That is, you may not be offering the security required by the credit card companies and could lose your right to process credit cards and be subject to excessive fines for not being PCI compliant. You don't want your customers poking around your valuable business records.
If you do decide to offer Wi-Fi to your customers, it would be best to place your wireless router on a computer that is not connected to your primary business system. Furthermore, having several customers using your wireless system could lead to legal problems. What happens if one of your customers browses the internet and gets a virus or spyware? Who's he going to sue? Is it your fault or your customer's fault? What happens if one of your customers accesses another customer's computer on your Wi-Fi system? It is best to use a professional when setting up a Wi-Fi system within your business.
Once again, I am not recommending or not recommending offering Wi-Fi service to your customers. It's great for McDonald's and Starbucks. Think before you leap.
New York State, like most states, needs money. The state, like many other states, has begun to get stricter on collecting tax.
What's the tax on a bagel? It depends how you slice it—or in the case of New York, if you slice it.
In New York State, food is not taxed. If you go into a bagel shop, McDonald's or 7-Eleven, there is no tax on your bagel.
If the counter person cuts your bagel, it is taxed. However, if the counter person gives you a knife and you cut the bagel, it is not taxable.
Should you buy a bagel and cream cheese, it is not taxed, Should the counter person put the cream cheese on the bagel, it is taxed.
If you go into a 7-Eleven and pour yourself a cup of coffee, it is tax free. However, should the coffee be poured by a counter person, it is taxable.
Should you pour your own cup of coffee and sip it while you are in the store, it is taxable. Should you pour your own cup of coffee and leave the store without sipping it, it is tax free.
Your donuts are tax free depending on where you drink your coffee. Should you want to drink a cup of lemonade with your donut, it is taxed no matter who pours the lemonade or where you drink it.
Got it?...lemonade gets taxed. Orange juice does not get taxed (as long as you pour it yourself and drink it outside of the store). However, if a server pours the juice into your cup, it is taxed. I'm not sure what happens if you buy a carton of orange juice and drink it within the store.
Good news. There is no tax on pretzels. However, if you purchase a pretzel that has been heated (like in one of the twirling pretzel machines), you owe tax.
You can purchase a package of Planters peanuts without paying tax (but don't open that package within a convenience store). Once you open that package within a convenience store, you need to walk back to that counter and pay tax. ... and don't buy a package of honey roasted peanuts. They get taxed.
Health bars don't get taxed but a bottle of water does.
To make matters worse, the tax bureau sends out enforcers who check on convenience stores and restaurants to make sure that businesses are collecting and submitting taxes. Getting caught could cost you thousands of dollars. The tax people meter the number of people walking into your business. 7 cents on one cup of coffee is $7 per hour, $70 per day, $280 per month and over $3,000 per year. If your audit goes back 3 years, you owe $9,000 plus a few thousand in interest and penalties just for that one tiem.
If you really want to see what is taxable and not taxable in New York State, go here:
Are you still confused? New York State is still working on the rules and will published them on their website (once they figure them out). Do note, these are not new taxes. New York State is enforcing tax laws that have already been passed.
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