Assemblyman Bob Reilly is trying to generate hundreds of millions of dollars for the state by taxing gift cards when they're purchased, instead of when they're redeemed.

Reilly, D-Colonie, said because about 25 percent of gift cards are never redeemed, New York is missing out on a large pot of sales tax revenue. Under existing law, the state doesn't collect sales tax from a gift card until is used to make a purchase.

"This means New York state and its localities lose badly needed sales tax revenue on each unredeemed gift card," reads the bill memorandum. "At a time when state and local governments are struggling to meet budgetary obligations, it is necessary for the state of New York to close this loophole in the Tax Law."

According to the bill's memorandum, this is a national problem, with $41 billion in gift cards going unspent from 2005 to 2011.

Reilly's proposal doesn't currently have a Senate sponsor. His bill has been referred to the Assembly committee on Ways and Means, without a meeting date.

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