For restaurant owners, navigating the requirements to properly account for gift cards is not an easy task. The tax rules for recognizing gift card sales into revenue differs from the revenue recognition requirements for generally accepted accounting principles. As gift card sales continue to be a larger and larger part of a restaurant’s cash flow, understanding and applying these rules properly is an extremely important aspect to analyzing the financial success of your business. Equally important is the tax treatment of unredeemed gift cards. Recognizing the tax revenue too soon results in too much tax paid and deferring the recognition of unredeemed gift card income for too long can result in incorrectly filed income tax returns. The ORBA Restaurant Group is ready to help you with all aspects of gift card accounting and tax compliance.