Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
280.0000 GIFTS, MARKETING AIDS, PREMIUMS AND PRIZES— Regulation 1670
280.1097 Samples Sold to Salesmen. A manufacturer sells merchandise samples to its salespersons at 50% off the regular price. When the sample is no longer useful, the salesperson is at liberty to dispose of it as he wishes. He may keep it, give it away, or sell it for any price he can negotiate and keep the proceeds.
The sales to the salesperson are taxable sales even though the only use of the samples may be demonstration and display, because this use does not occur while the samples are being held for resale in the regular course of business. Any subsequent sale of the sample by the salesperson is optional and purely incidental, and in the same category as the disposal of any fixture, machine, auto, etc., after its useful life is finished. If the salesperson later sells it to a retail store, he would not incur tax liability if the store purchases it for resale. The salesperson would incur liability on retail sales if he made three or more sales in any 12-month period. 11/18/58.