Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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R

490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655

Annotation 490.0320

(a) RETURNED MERCHANDISE

(2) "Full Sale Price"

490.0320 Trading Stamps. A customer purchases a $2 article paying 6¢ sales tax and is also given trading stamps which cost the seller 5¢ and which cost is deducted from gross receipts as a cash discount.

The customer returns the merchandise but is unable to return the trading stamps. The seller therefore charges the customer 10¢ for keeping the stamps, and refunds to the customer $1.96.

The amount of cash discount is the amount paid by the retailer for the trading stamps. Under the example above, the original selling price of the article was, accordingly, $2.01 and, unless that amount is refunded, the deduction for returned merchandise should not be allowed. 7/17/53.