Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655
(a) RETURNED MERCHANDISE
(1) In General
490.0080 Rescission vs. Second Sale. A rescission, not a second taxable sale, occurred when the buyer of a business defaulted on his fourth installment payment and the buyer and seller agreed that the business be returned to the seller. The retention of the first three installment payments by the seller does not defeat the rescission since such payments can be considered payment for the use of and profits from the business during the period the buyer was in possession. However, the original sale is taxable and no returned merchandise deduction is allowable because the full purchase price was not refunded. 9/4/64.