Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655
(a) RETURNED MERCHANDISE
(2) "Full Sale Price"
490.0280 Subsequent Billing for Charges. In order for a retailer to be entitled to a deduction on account of merchandise returned, section 6012 of the Sales and Use Tax Law requires that the "full sale price" be refunded. Where the credit memorandum indicates a refund or credit of the full sale price followed, however, by a billing for a charge designated as delivery, use, or rental, it would appear that in substance the requirements of the statute have not been complied with, regardless of whether the billing is designated as a delivery charge, usage charge, or rental. The fact is that a charge is made to the customer on account of the transaction resulting in the return of merchandise which in substance and effect is not to refund credit to the customer the "full sale price" as required by section 6012. The fact that tax may have been paid measured by the amount of this delivery, usage, or rental charge does not alter the fact that the customer has not received a refund or credit of the full sale price. Whether the customer purchases other merchandise or not would appear immaterial since he pays the full price of the replacement merchandise plus the charge made on account of having returned the original merchandise. If the customer had originally been charged for the delivery of the merchandise and if title to the merchandise had passed to the customer prior to delivery so that under section 6012 the delivery charge would not be a part of taxable gross receipts, then failure to refund the delivery charge would not prevent the taking of a deduction for returned merchandise. 11/7/51. (Am. 2002–2).