Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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G

295.0000 GROSS RECEIPTS

Annotation 295.0432

(a) GENERAL

295.0432 Reimbursement for Replacing Property. A customer contracts with a printer for a job order. After completion of the work, the printer forwards the printed matter to a graphic artist to put the finishing touches on the job. Due to defective work performed by the graphic artist, the job order must be redone. The graphic artist pays for the cost of replacing the printed matter and the customer is billed only for the original specified price. Under these circumstances the act of redoing the original order has no tax consequences to the printer. Tax applies only to the amount billed to the retail customer since it is for the transfer of title to the printed matter.

If the graphic artist must reimburse the retail customer for the amount of the printing order, there is no tax due on this amount. The payment of such reimbursement by the graphic artist is in the nature of "damages," not the sale of tangible personal property. Again, tax applies only to the amount billed by the printer to the customer on the original order. 5/5/93.