Stores can’t write off customer donations made at checkout
CLAIM: When a customer elects to donate to charity at a store’s checkout counter, the store can write off that donation on its own end-of-year taxes.
AP’S ASSESSMENT: False. Stores can’t write off a customer’s point-of-sale donations, because they don’t count as company income, according to tax policy experts. Customers can write off their own donations if they choose. Stores are allowed to write off their own donations, such as when a store donates a certain portion of all its proceeds to charity.
THE FACTS: As holiday traffic surged back to stores on Black Friday and Cyber Monday, a widely circulating meme falsely claimed that retailers ask customers to add a little more for charity when checking out in order to fund their own tax write-offs.
The meme, shared thousands of times this week on Facebook and Instagram, included two images of the same man, one showing him beginning to put glasses on his face and another showing him with the glasses fully on.
“Would you like to add an extra dollar to your order to help feed the homeless this holiday season?” read a text panel next to the first image.
“Would you like to let us con you into helping fund our end-of-year tax write-off so that our company can get good press by looking charitable without dipping into our own profits, much of which is wages we’ve stolen from our workers,” read a text panel next to the second image.
The notion that stores prompt customers to give to charity in order to sweeten their own tax returns is misguided, according to Renu Zaretsky, a writer at the Urban-Brookings Tax Policy Center.
“The only way a company can write off money is if it’s income,” Zaretsky said. “And this is not counted as income.”
Rather than receiving a customer’s donation as income, the company serves as a holding agent for that money, Zaretsky said. Customers may tally up their cash register donations for their own tax returns, but stores are not allowed to claim those.
However, if a company gives to a charity on its own, not through prompting a customer to give, it can write off that money, according to Garrett Watson, a senior policy analyst at the Tax Foundation.
For example, he said, if a company dedicates 1% of its pre-tax sales to a charity, that percentage “would be deductible for the business but not for the customer.”
Checkout charity campaigns bring in millions of dollars for charitable organizations each year, but customers should know they aren’t obligated to give when prompted, according to Zaretsky. They should also know, though, that a donation option at the cash register isn’t a sign of a money-hungry organization looking to lower its tax bill.
“A corporation is not ripping you off in order to lower its own taxes by asking you to round up,” Zaretsky said. “They’re just trying to help another organization.”
This is part of AP’s effort to address widely shared misinformation, including work with outside companies and organizations to add factual context to misleading content that is circulating online. Learn more about fact-checking at AP.