Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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195.0000 CONTAINERS AND LABELS—Regulation 1589

Annotation 195.1590


195.1590 Pallets Purchased Subsequent to Delivery. There is no exemption for sales of containers to persons who use the containers, not for shipping goods to others, but for internal purposes. Such containers cannot be purchased under a resale certificate. For example, a customer purchases bottled water for resale which is delivered on both new and used pallets. The taxpayer considers the pallets to be returnable containers and pays tax to his/her suppliers on the purchase price of the pallets. The customer informs the taxpayer that he/she wants to keep the pallets for the purpose of transferring merchandise among his/her various stores. The original transaction between the taxpayer and customer is not subject to tax in whole or in part. The containers were "returnable" containers and were properly taxed to the taxpayer. Subsequent to the original delivery, customer purchased the pallets. This was a retail sales transaction separate from the sale of the bottled water.

The taxpayer is not entitled to a tax-paid purchases resold deduction on the new pallets purchased tax-paid and sold under the described circumstances. The taxpayer used the pallets by filling the pallets prior to the time the pallets were sold to his customer. The pallets were purchased as returnable containers and were used as returnable containers and as such, taxable. 12/16/92.

(Note: Statutory change to section 6364, operative April 1, 2000, re food containers.) (Am. 2000–2).