Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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G

295.0000 GROSS RECEIPTS

Annotation 295.0036.750

(a) GENERAL

295.0036.750 Charge for Cleaning and Testing Returnable Containers. A taxpayer is in the chemical distribution business. The chemicals are sold in returnable containers (poly returnable drums and totes). The taxpayer charges its customers a cleaning and testing fee of $5.00 per container. The containers will be cleaned and tested by the taxpayer's branch personnel at the branch where the container is returned by the customer. This charge is required, not optional. The fee will appear as a separate line item within the body of the invoice to the customer when containers are returned.

Since the $5.00 charge is required, the charge is a condition of purchasing the chemicals from the taxpayer and it is an integral part of the sale of the chemicals. Thus the $5.00 charge is a charge for services that are a part of the sale of the chemical and included in the measure of tax. In other words, tax applies to the total amount of the sale price of the chemicals sold to the customers, including the $5.00 charge for cleaning and testing unless the sale is specifically exempt from taxation by statute. 6/27/96.