There’s a very interesting sales tax issue brewing here in Boulder, as reported in the local paper. Seems that someone in city hall has gotten the inspiration to tax a local coffee house, Vics, for the hundreds of free cups of coffee they hand out to frequent customers.

Lots of companies in Boulder have the customer loyalty device in question: a frequent buyer punch card or similar. I have about a dozen of them in my wallet or car glove compartment and they’re all generally the same: get ten punches and the eleventh is on the house. Whether it’s an expensive coffee drink, a burrito, a smoothie or even a sandwich, companies from Safeway to Wahoo’s Fish Tacos have these ubiquitous cards.

According to the paper, Vic’s owes the city approximately $3,000 in unpaid sales tax, which is being labeled “use tax”. Rather than just pay it or register a complaint through the chamber of commerce, Vic’s has brought its fight public by putting up a Web site and hosting a fund raiser for its legal fund. You can check out the site at Vic’s Espresso.com.

I’m torn on this issue because on the one hand, I really like the loyalty card idea and it does help me decide to return to my favorite haunts on a regular basis, but tax revenue from commercial transactions are also an important source of funds for the city and the myriad of services I enjoy as a resident too.

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Search Engine Roundtable notes that the Google Local Business Center is allowing businesses to enter their own, custom categories. While this new functionality has been around for a few weeks now, it is an important one and addresses a major need that both Mike Blumenthal and I have highlighted previously — I recently spoke about this issue again at the SMX West session on Local Search & Blended Results. Previously, businesses could only select business categories from an unusually short list of categories. Exacerbating the issue, some businesses achieved other category associations outside of Google’s sharply limited taxonomy when their listings found in other yellow pages providers such as Superpages were absorbed into Google Maps, including the more comprehensive categories found in those other content sources.

Under the new functionality, businesses may type in custom business categories, and the interface also provides helpful potential term using the Google Suggestion Tool:

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