Tax Deduction: Cash Back Rebates Redemption

[LetThereBeLight]

I have tried searching Google and the IRS site but with no success. If a company (in fuel oil delivery business) wants to offer their retail customers cash back incentives ($5-$20 rebates), what is the proper way for the company to do it in order to write off the expense? Is it absolutely necessary to contract w/ another company to handle the cash back redemption? Can the company directly give back actual cash or must it use checks for cash back payments? Any useful info including links is much appreciated. Thanks!

[Antigone*of*Greece]

Originally Posted by LetThereBeLight

I have tried searching Google and the IRS site but with no success. If a company (in fuel oil delivery business) wants to offer their retail customers cash back incentives ($5-$20 rebates), what is the proper way for the company to do it in order to write off the expense? Is it absolutely necessary to contract w/ another company to handle the cash back redemption? Can the company directly give back actual cash or must it use checks for cash back payments? Any useful info including links is much appreciated. Thanks!

I haven't seen LdiJ around in a few days, maybe she is on vacation but it would see appropriate to handle this way:

I would not do it with cash. Cash is king and you could hurt your cash flow, and even cost yourself more in banking fees by issuing more checks. Give your customers a coupon for redemption and then when the coupon is presented with the payment charge that amount to advertising.

I'm sure if my suggestion is not worth what you paid for, the other senior members will let us all know

[tranquility]

I am uncertain about the difficulty. A rebate is certainly an ordinary and necessary expense of doing business and would be deductible. Checks are always best to create a paper trail.

[davew128]

This isn't really a tax question. How do your competitors do it?

[Stevef]

Originally Posted by LetThereBeLight

I have tried searching Google and the IRS site but with no success. If a company (in fuel oil delivery business) wants to offer their retail customers cash back incentives ($5-$20 rebates), what is the proper way for the company to do it in order to write off the expense? Is it absolutely necessary to contract w/ another company to handle the cash back redemption? Can the company directly give back actual cash or must it use checks for cash back payments? Any useful info including links is much appreciated. Thanks!

It seems you could simply keep track of them and include them under "Returns and Allowances" (Line 2 on the Schedule C)

[tranquility]

I agree that is the proper place to put a rebate.