It’s not just thrifty social media lovers who have been keeping a sharp eye on the Lawrence deals popping up on Groupon or LivingSocial.
Since the Internet trend arrived in Lawrence in January, the daily deals have gotten the attention of local and state officials who want to make sure that retailers are paying the proper sales taxes.
Each day, Groupon offers one deal in each of its markets. That deal is typically a 50 to 90 percent discount off the price of the product or service, and the offer might be good only if enough people agree to buy it. Customers buy the coupons online and redeem them at the local shops. Groupon and the retailer split the cost of the proceeds.
Another website, LivingSocial, operates on a similar concept.
These social coupons are something the Kansas Department of Revenue is reviewing, spokeswoman Jeannine Koranda said.
“It’s on our radar,” Koranda said. “It’s an area where a lot of states are finding that technology is outpacing their laws.”
Since January, Groupons have been offered in Lawrence on everything from coffee to laser hair removal.
Many of the products, such as massages, a ride on a party bike and prescription eye glasses, are exempt from paying sales tax.
But the Groupons products sold in restaurants, coffee shops and pizza parlors do have to pay sales tax. In Groupon’s agreement with merchants, it states that retailers are responsible for covering the sales and use taxes on the goods and services.
In Lawrence, businesses such as 3 Spoons Yogurt, Wheat State Pizza and Mirth Cafe treat Groupons just as they do other coupons. Customers only have to pay sales tax on the amount not covered by the Groupon.
But according to the department of revenue, that might not be enough.
The state agency agrees that retailers need to pay the difference on what is covered in the coupon and what a customer buys. So for example, if someone buys $30 worth of pizza and has a $20 Groupon, they must pay sales tax on the $10 of pizza not covered in the Groupon.
But, the Department of Revenue also thinks tax should apply to the amount of money Groupon returns to the retailer for every item purchased.
So in the pizza example, if customers pay $10 for a $20 Groupon and $5 dollars goes back to the retailer from that sale, the retailer would have to pay taxes on that $5.
The revenue department doesn’t know whether retailers are doing that.
“I don’t even know if we would even be aware if they weren’t at this point,” Koranda said.
Lawrence City Manager David Corliss doesn’t think there is anything wrong with using Groupons, but he is still keeping an eye on the company.
“You always want to watch your tax base. It may be something to monitor,” he said.