Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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460.0000 REIMBURSEMENT FOR SALES TAX—Regulation 1700

Annotation 460.0146

460.0146 Offsets—Excess Tax Reimbursement. When a taxpayer transferred property to its customers, it regarded the transfers as sales and therefore collected sales tax reimbursement from its customers and reported the sales tax to the Board. It was subsequently determined that the property being transferred to the customer was incidental to the performance of a service. As a result, it was determined that the taxpayer had collected excess tax reimbursement from its customers.

Since the taxpayer is the consumer of the property transferred incidental to performing the service, use tax is due on the cost price of the property which was purchased ex-tax. The taxpayer may offset only the excess tax reimbursement which it mistakenly collected against its use tax liability on the use of the property transferred incidental to the providing of the service. Once the taxpayer knew that its transactions were not subject to sales tax, any amounts thereafter collected as sales tax reimbursement cannot be used as offset against its own tax liability. 2/6/95.