Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655
(a) RETURNED MERCHANDISE
(2) "Full Sale Price"
490.0160 Overhead Cost. A sells to B two machines. One is sold for $153,757 plus $9,994.21 tax and the other is sold for $155,125 plus $10,083.13 tax. The total price is $328,959.34 (which reflects a 5% quantity discount). B returns one machine. In calculating the refund A recalculates the sales price of the machine retained, but the sales price used does not reflect the 5% quantity discount. The difference between the recalculated amount and the total original sale represents the credit (5% quantity discount) allowed.
The returned merchandise deduction is not allowable under these circumstances. Regulation 1655(a) provides that only rehandling and restocking charges may be deducted. In this case the amount deducted from the original sale is not rehandling or restocking. 2/6/90.