Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655
(2) Warranty Charges—When Includable In Tax Measure
490.0740 Television. The retailer of a television set who sells a parts warranty to the purchaser, which warranty is mandatory, is required to return the tax to the state on the total charge, inclusive of the charge for the warranty. The charge for the warranty is properly regarded as a part of gross receipts from the sale of tangible personal property and the tax does not apply with respect to the furnishing of replacement parts by the retailer pursuant to the warranty. The sale of such parts as are furnished pursuant to the warranty will be regarded as included within the original sale, and such parts may, of course, be bought by the retailer under a resale certificate and he does not become liable for the tax on the cost thereof.
In the event the parts warranty is optional, the seller of the warranty should be treated as the consumer of such parts, materials, and supplies as he may furnish under the warranty subject to tax measured by the purchase price of such parts, materials, and supplies to him. 5/20/50.