Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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475.0000 RESALE CERTIFICATES—Regulation 1668

Annotation 475.0225

475.0225 Timeliness. A retailer sells equipment which he/she installs. The customer is allowed to test the equipment for 30 to 90 days and sometimes longer. If the customer does not accept the equipment it is returned to the retailer and the sale is voided. Frequently, the purchaser plans to resell the equipment and lease it back.

A resale certificate is timely, if it is accepted within the normal billing period. If the customer is not billed until after he/she accepts the equipment, a certificate accepted during the billing period is timely notwithstanding that the title may have passed upon the initial installation of the equipment. However, even if taken timely, a resale certificate will relieve a retailer of tax liability only if taken in good faith. It does not appear likely that a company would hold a piece of equipment for thirty to ninety days without making some functional use out of it, such as manufacturing other property. If the retailer has reason to believe that the purchaser will functionally use the equipment prior to the sale and leaseback, the retailer would not be regarded as accepting the resale certificate in good faith. 9/19/89.