The Matrix was effective January 1, 2014, and identifies three “best practices” with respect to discounted vouchers. The Best Practices Matrix addresses how sales tax should be assessed when the customer redeems the voucher with the local business. The customer then redeems the voucher at the local business in exchange for the product or service purchased. The online company retains a portion of the $25 and remits the balance to the local business selling the product or service. For example, a customer may pay $25 to an online company like Groupon or LivingSocial for a voucher for products and services valued at $50.

These “deal-of-the-day” websites feature daily coupons for goods and services from local businesses, which then are redeemable by the customer for a certain length of time. The Kentucky Department of Revenue has completed and published the Streamlined Sales Tax Governing Board’s § 328 Best Practices Matrix, which addresses the method of taxing discounted vouchers from websites such as Groupon and LivingSocial.

Groupon seller