Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
295.0367 Liquidated Damage Payments. A firm contracted to fabricate and install an electrical transformer. The contract was for a lump sum and provided for liquidated damages to be deducted from the contract price if the contractor failed to complete the project by a specified date. Liquidated damage payments or credits paid by the seller to the purchaser do not reduce the gross sales price for sales and use tax purposes. Liquidated damage payments are a convenient formula for determining civil damages payable for breach of contract. (Revenue and Taxation Code sections 6011 and 6012.) 6/23/93.