Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 185.0260

185.0260 Power to Transfer Title—Action by Consignor. A purchaser wishing to purchase consigned property held by the consignee signs an agreement containing the following provisions:

(1) The buyer shall purchase the property from the owner (consignor) and the consignee shall establish an escrow account to complete the exchange of the purchase funds and transfer documents.

(2) The owner shall, by a specified date, deposit into escrow a bill of sale drawn in favor of the buyer, and the buyer shall deliver into escrow the balance of the purchase price by cash or check made payable to the consignee as trustee.

(3) The funds will be placed in an escrow account but need not be segregated from other funds held by the consignee.

In the consignment agreement, no sale is deemed final until such time as the owner/consignor authorizes the release of the bill of sale to the buyer.

Whether the consignee is the retailer is a close question since, at some point, the consignee does have the power to cause title to be transferred to a third person. The critical question, however, is whether the consignee has such power "without any further action on the part of the owner." (Regulation 1569.) The consignee does not have the authority to pass title until he receives a bill of sale and authorization from the owner. Therefore, the consignee does not have the power to cause title to be transferred without further action on the part of the owner. Thus, the consignee is not the retailer of the property. 9/2/93.