Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 210.0057


210.0057 Carpet Samples. Carpet wholesalers purchase samples ex-tax for resale and later resell them to retail dealers. The only use made of the samples prior to sale is demonstration and display. Since carpet wholesalers regularly sell the samples to their dealers, the demonstration and display use is being made while the samples are being held for sale in the regular course of business. This position is consistent with the treatment of vehicles used only as demonstrators but being regarded as being held for sale in the regular course of business even though not actually offered for sale until a later date. There is no use tax liability resulting from the purchase and use of the sample.

The subsequent sale of the samples to dealers who have submitted resale certificates for "carpeting and rugs," may also be nontaxable if the samples are of a size that could be used as throw rugs or mats, and the dealers' use is limited to demonstration and display. Samples larger than 22" x 18" would meet this size standard. All samples size 22" x 18" or smaller, all samples bound in sample books, and all samples having holes with metal grommets inserted would be considered not sold for resale unless the dealer had submitted, and the wholesaler had accepted in good faith, a resale certificate specifically describing them. 7/17/67.