Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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D

215.0000 DEMONSTRATION, DISPLAY AND USE OF PROPERTY HELD FOR RESALE—VEHICLES—Regulation 1669.5

Annotation 215.0050

(a) GENERAL

215.0050 Car Dealers "Holdback Allowance." A vehicle manufacturer contends that the factory holdback allowance should be deducted in determining the "net dealer cost" for purposes of reporting use tax on vehicles, subject to the 1/40th or 1/60th fair rental value formula, which are used as company car demonstrators. The factory holdback allowance is a percentage of the factory invoice price, varying from 2 percent to 3 percent, which is shown on the dealer's sales invoice as a memorandum entry. It is annually credited to the car dealer against amounts they owe to the manufacturer.

The "net dealer price" is the manufacturer's selling price to its dealers, including optional extra cost equipment, before any discounts or rebates. It also includes the federal excise tax, but does not include destination, handling, and other charges." Therefore, for the limited purpose of determining the median cost (of the demonstrator) under Regulation 1669.5 (c)(2), the factory holdback allowance must be included in the "net dealer price." 11/30/90.