Sales tax when member pays part of the amount due

[adwhite89]

A member submitted a receipt for the cost of using a Vrbo property for a YW overnight activity. The receipt shows property fees, Utah sales tax, and the total for all of the above, which constituted the total amount due. Below that total, the receipt shows more than half of the amount due was paid using Vrbo rewards points which the member had previously accumulated. Essentially, the member donated the monetary value of their Vrbo rewards points to pay a large portion of the amount due, then they paid the remaining balance out of pocket. The member was only reimbursed for the out-of-pocket portion they paid.
How much of the original Utah sales tax should the church claim for this reimbursement?
My gut feeling is that the church can only claim sales tax on the portion that the member paid out of pocket (after the value of the Vrbo rewards points was subtracted from the amount due). However, the bishop feels the church can claim the entire original sales tax listed before the Vrbo rewards points were applied.
Who is right? Me or the bishop?

[russellhltn]

How much are you paying the member? The out of pocket, or are you effectively cashing out their points?

Either way, tax was charged, and it was paid in full (it wasn't paid for in points).

[adwhite89]

To answer your question, the member was only reimbursed for the remaining balance after she paid part of the total with points.
The total did include tax, and her use of points was a partial payment towards the total.

[adwhite89]

A member submitted a receipt for the cost of using a Vrbo property for a YW overnight activity. The receipt shows property fees, Utah sales tax, and the total for all of the above, which constituted the total amount due. Below that total, the receipt shows more than half of the amount due was paid using Vrbo rewards points which the member had previously accumulated. Essentially, the member donated the monetary value of their Vrbo rewards points to pay a large portion of the amount due, then they paid the remaining balance out of pocket. The member was only reimbursed for the out-of-pocket portion they paid.
How much of the original Utah sales tax should the church claim for this reimbursement?
My gut feeling is that the church can only claim sales tax on the portion that the member paid out of pocket (after the value of the Vrbo rewards points was subtracted from the amount due). However, the bishop feels the church can claim the entire original sales tax listed before the Vrbo rewards points were applied.
Who is right? Me or the bishop?

This is how I see it:
The property fees and tax are like layers of a cake, and the total due is the sum of both layers, which is the entire cake. Each partial payment is like removing a slice of the cake, and each slice contains part of the fees layer and part of the tax layer. The member removed about half of the cake by paying with rewards points. The Church removed the rest of the cake by reimbursing the member for the remaining slice. Since the Church's reimbursement slice had part of the fees layer and part of the tax layer, it seems to me that the church is only entitled to claim the amount of tax in the slice they paid for via the reimbursement.

[russellhltn]

I look at it this way: There's two layers of the cake and the frosting. The member's points paid for one layer. The church paid for the other layer and all of the frosting (the tax).

Presumably the entire cake was used for a church (tax-exempt) purpose.

Had the tax been lowered, or the points paid part of the taxes, or the cake was split up, then I'd agree with you. But as it stands, the church paid (reimbursed) and used all of it.

Taxes quickly turn into legal issues if you try to claim too much reimbursement. If this was a concern, I'm sure the church would have documented it somewhere such as on the Sales Tax page.

But if you want assurance from a more official source, I'd suggest calling Global Services Department.

[adwhite89]

I look at it this way: There's two layers of the cake and the frosting. The member's points paid for one layer. The church paid for the other layer and all of the frosting (the tax).

Presumably the entire cake was used for a church (tax-exempt) purpose.

Had the tax been lowered, or the points paid part of the taxes, or the cake was split up, then I'd agree with you. But as it stands, the church paid (reimbursed) and used all of it.

Taxes quickly turn into legal issues if you try to claim too much reimbursement. If this was a concern, I'm sure the church would have documented it somewhere such as on the Sales Tax page.

But if you want assurance from a more official source, I'd suggest calling Global Services Department.

I called the Global Services Department. Because the receipt with points applied was unusual, the lady did not have an immediate answer, so she forwarded it to their finance team. I subsequently received an email confirming that since the sister's use of points was a "cost" to her and not a "benefit," and because the entire amount was used for church purposes, that the church can claim the full tax amount.

Thank you!

[russellhltn]

Thanks for reporting back what you found.