Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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R

490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655

Annotation 490.0750

(d) DEFECTIVE MERCHANDISE

490.0750 Defective Trailer. A firm purchases a trailer in September 1992. The trailer was defective and after numerous attempts to fix the problem, the dealer agreed to replace it. A new trailer with a sales price of $18,105 was furnished. A credit of $9,400 for the "trade-in" was allowed. The manufacturer paid $8,705 on account of the defective condition of the first trailer. The firm paid $1935.55 which covered sales tax and registration fees.

The appropriate amount of sales tax due on the transaction is measured by the sales price ($18,105) less the amount credited by the manufacturer on account of the defective condition of the trailer ($8,705). The dealer should refund the excess tax reimbursement and file a claim for refund. 2/25/94.