SL16001A01. Streamlined Sales Tax - SLAC Post Transaction Survey - SL16001A01

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1 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas 1. Absent a concern with fraud, what is your state s statute of limitations for a seller to obtain a refund of tax for returned merchandise? Code of Alabama 1975, Section 40-2A- 7: (2) NOTE a Arizona s statute of limitation in regard to the filing of an amended return is 4 years from the due date of the return or from the date of actual filing whichever is later. (A.R.S ). A seller may obtain a refund of tax paid within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of the periods expires later. Ark. Code Ann (i)(1)(a); Gross Receipts Rule GR- 81.1(E). RTC section 6902, Claim; limitation period, states that whichever of the following dates occurs last is the filing deadline for a claim for refund: Three years from the due date of the return on which an overpayment of tax was made. Six months from the date of overpayment. Six months from the date a determination (billing) became final. NOTE a 90 days from date of purchase; Conn. Gen. Stat (a)(8)(B)(ii) and (a)(9)(B)(ii); see Informational Publication 2011(17), Sales and Use Taxes on Returned Goods, Even Exchanges, and Trade-Ins 3 years from the date of payment of the tax. O.C.G.A (c)(1)(A). Three (3) years after the latter of (1) the due date of the sales or us e tax return or (2) the date of payment. For purposes of this statute, the due date of a sales tax return for any given year deemed to be December 31 of that year IC The statute of limitations is three years after the filing that covers the initial transaction. Iowa Code (1). Three years. K.S.A (b) 2. Absent a concern with fraud, is the seller s paper or electronic sales receipt showing tax was charged sufficient documentation to establish and support that a customer paid sales tax? Yes. Code of Alabama 1975, Section 40-2A- 3 NOTE b NOTE a Yes. NOTE a The seller should maintain more than just the paper or electronic sales receipts to support the correct amount of tax paid. Normal books of account, bills, receipts, invoices, cash register tapes, or other documents of original entry, and schedules or working papers used in connection with the preparation of tax returns. Reg Yes. IP 2011(17). Dealer must keep records of taxable sales, books to determine amount of taxes collected, invoices, and other records that accurately reflect tax required to be collected and remitted. O.C.G.A ; Ga. Comp. R & Regs , Generally, the s eller s paper or sales receipt showing tax was charged is sufficient to show the customer paid sales tax. Ultimately, the answer may depend on all facts Yes. IC and circumstances 13; IC surrounding the 1 transaction. No, because of the documentation required by K.S.A (b)(4) through (6). The seller s paper or electronic taxable sales receipt must be tied to that documentation. K.A.R b discusses the requirements for electronic recordkeeping. 1

2 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota 1. Absent a concern with fraud, what is your state s statute of limitations for a seller to obtain a refund of tax for returned merchandise? NOTE a NOTE a NOTE a 3.5 years from the invoice date M.S. 289A.40 Subd. 1 NOTE a. Three years, NRS and NAC years from date of payment. N.J.S.A. 54:32B- 20(a); N.J.A.C. 18:24-5.2(c). Generally 3 years after the date of the return or 2 years after payment unless a different period applies N.C. Gen. Stat (a) North Dakota has no statute of limitations regarding the amount of time a customer has to return merchandise in order to qualify for a refund of tax paid. 2. Absent a concern with fraud, is the seller s paper or electronic sales receipt showing tax was charged sufficient documentation to establish and support that a customer paid sales tax? Yes. KRS (1) Generally, yes Yes, assuming the tax is separately stated. Yes No. In addition to a seller s receipt or invoice showing sales tax was charged, the Department will verify that the seller was licensed to collect Nebraska sales tax during the tax period in question. Yes No, proof of seller's remittance to state is required. N.J.A.C. 18:2-5.8(d)3i. In general, yes. NOTE a Yes 2

3 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota 1. Absent a concern with fraud, what is your state s statute of limitations for a seller to obtain a refund of tax for returned merchandise? Generally 4 years. NOTE a. A refund claim cannot be made more than three years after the date the sales tax was remitted to the Tax Commission. 68 O.S. 227 NOTE a No statute of limitations. SD Three years Codified Law from December 31 of the year in which the payment was made. Tenn. 29, Deduction Allowed for Sales Refund, and SD Administrative Ruling 64:06:01:41, Returned Merchandise. Code Ann (a)(1)(A). NOTE a 4 years from the date the sales tax is due 3 years from date return filed Within 3 years of date return was required to be filed. 32 VSA 9781(a). NOTE a 2. Absent a concern with fraud, is the seller s paper or electronic sales receipt showing tax was charged sufficient documentation to establish and support that a customer paid sales tax? NOTE b. Yes, a seller s paper or electronic sales receipt is one example of sufficient documentation to establish that a customer paid sales tax. Yes, however RI reserves the right to request documentation Yes per SD Administrative Ruling 64:06:01:35, Requir showing that the ed records for seller remitted the tax. sales, rentals, and leases. NOTE b NOTE a Yes Yes Generally, yes. A taxpayer is subject to the recordkeeping requirements set out in RCW See also WAC

4 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia 1. Absent a concern with fraud, what is your state s statute of limitations for a seller to obtain a refund of tax for returned merchandise? 3 prior tax years, or 2 years after payment date There is no statute of limitations for the seller to obtain a refund of Three years tax for returned from date of merchandise as overpayment long as the seller (return date). refunds the tax to the purchaser. W.S (sec (4), 109(c)(i), W.S. Wis. Stats.) (d)(i) 2. Absent a concern with fraud, is the seller s paper or electronic sales receipt showing tax was charged sufficient documentation to establish and support that a customer paid sales tax? Yes, but an accompanying receipt for the refund of tax must also be provided Yes Yes. WY Dept. of Revenue Rules, Chapter 2, Sec 8(b) 4

5 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas 3. How can a seller obtain a refund when a customer returns the product in a different period from when the sale was made (e.g., return was made in March, 2015)? a. Deduction may be taken in the filing period the merchandise was returned in (March 2015) a., b., or d a. A seller would appropriately take a deduction for the returned merchandise in the period in which the merchandise was returned. Option A. A seller may reduce the amount of gross receipts reported on the March report by the amount of the gros s receipts for returned merchandise. A seller collects and remits tax only upon the amount of consideration received for the sale. Ark. Code Ann (13); Gross Receipts Rule GR-3(H). a. If the requirements of Regulation 1655 are met, sellers can claim a returned merchandise deduction on their Sales and Use Tax Return in the filing period when the merchandise is returned. Deduction is taken in the period during which the merchandise was returned; Conn. Gen. Stat ; Form O- 88, Instructions for Form OS- 114, Sales and Use Tax Return, Line 52. a, b or d. Deduction may be taken in the filing period the merchandise was returned in (March 2015). O.C.G.A (2)(A). b. Amendment made to the January 2015 tax filing IC and d. Other NOTE a b. Amendment made to the January 2015 tax filing. NOTE a b. Amendment made to the January 2015 tax filing c. No credit or refund allowed d. Other (explain) NOTE c 5 Seller may file a claim for refund within 3 years from the date the tax was paid. O.C.G.A (2)(B), -2-35(c)(1)(A); Ga. Comp. R. & Regs Indiana would allow a seller to report the return as a negative transaction in the gross sales amount. IC ; IC

6 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota 3. How can a seller obtain a refund when a customer returns the product in a different period from when the sale was made (e.g., return was made in March, 2015)? a and d. NOTE b a. Although the preferred method, b is also allowed as well as d: filing a sales tax refund application with the agency. Either a. or b. a. Either A. or B, provided the sale was rescinded. a. It may be taken when merchandise was returned unless the tax rates are different. NAC d. Options a. and b. are acceptable A. Deduction methods as for tax well as the refunded may option to file a be taken in the claim for refund period the using the merchandise applicable was returned refund claim and the tax was form. NOTE b refunded. a. Deduction may be taken in the filing period the merchandise was returned in (March 2015) b. Amendment made to the January 2015 tax filing c. No credit or refund allowed d. Other (explain) 6 NOTE a

7 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota 3. How can a seller obtain a refund when a customer returns the product in a different period from when the sale was made (e.g., return was made in March, 2015)? a. & b. NOTE c The seller can obtain a refund by filing an amended sales tax report for January 2015 or by providing a completed Form 13- A. seller may 9 Application for take credit for Credit or Refund of tax refunded in State and Local Sales or Use Tax the month the with supporting merch was documentation. returned. A. SD Codified Law , Deduction Allowed for Sales Refund, and SD Administrative Ruling 64:06:01:41, Returned Merchandise. Option a. The seller may take a credit on its return for March 2015 or file a refund claim. The seller should not amend the January 2015 tax return. TENN. COMP. R. & REGS (a), (b) and (d)..79 NOTE b a and b a. Deduction may be taken in the filing period the merchandise was returned Options (a), (b) in. or (d) NOTE b a. Deduction may be taken in the filing period the merchandise was returned in (March 2015) b. Amendment made to the January 2015 tax filing c. No credit or refund allowed d. Other (explain) 7

8 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia 3. How can a seller obtain a refund when a customer returns the product in a different period from when the sale was made (e.g., return was made in March, 2015)? a. Deduction may be taken in the filing period the merchandise was returned in (March 2015) b. Amendment made to the January 2015 tax filing c. No credit or refund allowed a a. (answer assumes seller a or b W.S refunds the tax 109(c)(i), W.S. to the purchaser when 109(d)(i)WY the product is Dept of returned - sec. Revenue Rules, (4), Wis. Chapter 2, Sec Stats.) 5(f) d. Other (explain) 8

9 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern by adding that the seller imposes a 20% restocking fee or $20 ($100 x 20%). 4. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is deducted from the amount refunded to the customer ($100 + $6 - $20 = $86 refunded)? No. DOR rule , Code Section (a)(6) No. They are only refunding $80 so only $4.80 in tax is refundable. A seller may obtain a refund of all tax paid in this situation by keeping and preserving records to support that all tax on the Assuming the 20% original sale was refunded to the customer. Ark. Code Ann ; Ark. Code Ann ; Gross Receipts Rule GR-81.1 restocking fee represents the average cost, or does not exceed the actual cost of restocking the merchandise, the seller can obtain a refund of all the tax paid. No. The tax refund is on the net of the purchase price less the restocking fee, if returned within 90 days; Conn. Gen. Stat (a)(8)(A)(ii) No. See and (a)(9)(A)(ii); IP 2015(12), Getting Started in Business, p No. NOTE a NOTE b Yes. See K.A.R b(a)(4) 5. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is charged to the customer as a separate transaction ($106 refunded and $20 charged separately)? No Yes but the $20 restocking fee is subject to tax as part of gross income. A seller may obtain a refund of all tax paid in this See Response to situation by question 4. The fact keeping and that the restocking fee preserving is charged to the records to support customer as a that all tax on the separate transaction original sale was does not affect refunded to the whether the seller customer. Ark. qualifies for a Code Ann ; Ark. Code Ann ; Gross Receipts Rule GR returned merchandise credit assuming the qualification of Regulation 1655 have been met. No. Conn. Gen. Stat (a)(8)(A)(ii) and (a)(9)(A)(ii) No. See sales-and-use- tax. Yes; IC NOTE b NOTE b Yes. See K.A.R b(a)(4) 9

10 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern by adding that the seller imposes a 20% restocking fee or $20 ($100 x 20%). 4. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is deducted from the amount refunded to the customer ($100 + $6 - $20 = $86 refunded)? Yes. NOTE c Yes, provided the restocking fee is consistently applied to all merchandise returns. NOTE b Yes (restocking fees are not taxable) No. Any charge for the return of an item is a portion of the sales price that is not refunded to the customer. Nebraska Sales and Use Tax Regulation Yes, NAC Yes. The restocking fee is not subject to tax. See N.J.S.A. 54:32B- 3. Yes Yes 5. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is charged to the customer as a separate transaction ($106 refunded and $20 charged separately)? Yes. NOTE c Yes, provided the restocking fee is consistently applied to all merchandise returns. NOTE b Yes (restocking fees are not taxable) 10 No. Any charge for the return of an item, even if separately charged, is a portion of the sales price that is not refunded to the customer. Nebraska Sales and Use Tax Regulation Yes, NAC Yes. The restocking fee is not subject to tax. See N.J.S.A. 54:32B- 3. Yes Yes

11 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern by adding that the seller imposes a 20% restocking fee or $20 ($100 x 20%). 4. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is deducted from the amount refunded to the customer ($100 + $6 - $20 = $86 refunded)? No NOTE d. No, the sales tax refunded to the customer is on the net amount of the refund after any charge for the restocking fee. OAC 710: (b). No per (58) refund of tax is not allowed on restocking fees. Tax would be due on the $20 restocking fee. Depends on where the restocking is sourced to. If the restocking is at a location in SD then the restocking fee will be taxable. If the restocking is at a location outside SD then the restocking fee is not subject to SD tax & the customer receives a full refund of the tax paid. NOTE a Yes, if the seller credits or refunds the tax to the customer for the returned merchandise, the seller may take a deduction on its return or file a claim for refund. Separately itemized fees or charges for restocking and handling of returned merchandise are not subject to sales tax. The seller may obtain a refund of the amount of sales tax refunded to the customer (i.e. $6). The restocking fee is not a taxable item. Tex. Tax Code Sections , and Yes Yes NOTE c 5. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is charged to the customer as a separate transaction ($106 refunded and $20 charged separately)? This is considered two separate transactions and as such, the vendor is returning the entire purchase price. The vendor may claim a refund of the $6. See Ohio Admin. Code While the seller may obtain a refund of all tax paid ($6), the seller should collect and remit sales tax on the $20 restocking fee. No per (58) refund of tax is not allowed on restocking fees. Tax would be due on the $20 restocking fee. Yes. The restocking charge will be taxable if the restocking is at a location in SD. SD Codified Law , services are subject to sales tax. 11 Yes, the restocking fees must be separately itemized from the credit for the returned merchandise on an invoice or other sales document that is given to the customer. The seller may obtain a refund of the amount of sales tax refunded to the customer (i.e. $6). The restocking fee is not a taxable item. Tex. Tax Code Sections , and Yes Yes Yes. NOTE d

12 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern by adding that the seller imposes a 20% restocking fee or $20 ($100 x 20%). 4. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is deducted from the amount refunded to the customer ($100 + $6 - $20 = $86 refunded)? No No, only a portion of the tax is refunded or $4.80 ($100 - $20 = $80 x 6% = $4.80) sec (2), Wis. Adm. Code Yes. A restocking fee is a non-taxable service fee, because it is subsequent to the tax moment. WY Dept of Revenue Rules, Chapter 2, Sec 5(f) 5. Can the seller obtain a refund of all tax paid ($6) when a $20 restocking fee is charged to the customer as a separate transaction ($106 refunded and $20 charged separately)? Yes Yes, the seller can obtain a refund of the entire $6 on the first transaction. However, the restocking fee is subject to tax so tax will be charged on the second transaction (i.e., $20). Therefore, the answer is the same as #4 as far as the net returned tax amount. Yes. Same as #4 12

13 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 6. If the seller refunds $100 to the customer for the product but does not refund the $10 delivery fee, what tax amount can the seller obtain a refund of? a. All tax, $6.60 b. Only tax on the product, $6 c. No tax refund. N/A Separately stated delivery charges are not subject to tax Option A. A seller may obtain a refund of all tax paid in this situation by keeping and preserving records to support that all tax on the original sale was refunded to the customer. Ark. Code Ann ; Ark. Code Ann ; Gross Receipts Rule GR c. Regulation 1655 states that the full sales price, including the sales tax, less rehandling and restocking costs, must be refunded to the customer in order for the seller to qualify for a returned merchandise credit. In addition, the customer must not be required to purchase other property at a price greater than the amount charged for the property that is returned. As the shipping charges are included in the selling price, both the shipping and sales tax on the shipping must be refunded to the customer in order for the seller to qualify for a returned merchandise credit or refund b. Only tax on the product, $6, if returned within 90 days; Conn. Gen. Stat (a)(8)(B)(ii) and 12- b. Only tax on the 407(a)(9)(B)(ii) product, $6 A seller cannot obtain a refund of sales/use tax collected unless the seller refunds those amounts to the purchaser. IC Assuming the sales tax is refunded to the customer, the maximum amount of refund for the seller is (b) Only tax on the product, $6. b. Only tax on the product, $6. However, transportation and delivery charges are not subject to Iowa sales tax when separately contracted for. Iowa Admin. Code r b. Only tax on the product, $6. See K.A.R b(2) c. No tax refund NOTE d d. Other (explain) 13

14 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 6. If the seller refunds $100 to the customer for the product but does not refund the $10 delivery fee, what tax amount can the seller obtain a refund of? a. All tax, $6.60 b. KRS (12)(a) and KRS b. Tax on the product ($6) is refundable, as the full value of the product was returned to the customer. Assuming that the sales price of the item included delivery, the refund would only be a partial refund and the answer is b. b. d. b. Only tax on the product B. The seller must refund tax to the customer before receiving a refund of tax from the State. See N.J.S.A. 54:32B-20(a), N.J.A.C. 18: Option b. If a customer is refunded the pro rata amount of the sales tax based on the taxable amount of the sales A. All tax price refunded. originally paid, NOTE c $6.60. b. Only tax on the product, $6 c. No tax refund d. Other (explain) 14 NOTE b

15 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 6. If the seller refunds $100 to the customer for the product but does not refund the $10 delivery fee, what tax amount can the seller obtain a refund of? a. All tax, $6.60 b. NOTE e. Oklahoma does not tax separately stated delivery charges and therefore cannot respond to this question. B since the delivery charge was not refunded tax would be due on the delivery charge only. B. Delivery fees are taxable per SD Codified Law , Gross Receipts Defined. Only the amount of tax credited or refunded to the customer. If the seller refunded the customer $6.60 in tax, then (a). If the seller refunded the customer $6.00, then (b). Tenn. Code Ann (a)(1)(A). b. NOTE c d. $6 UT does not tax delivery b. Only tax on the product, $6. Assuming the seller also refunds the sales tax of $6, Option (b). Washington would treat this as a return of the good, and refund only the tax on the product, or $6. See WAC (2); see also WAC (2)(d). b. Only tax on the product, $6 c. No tax refund d. Other (explain) 15

16 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 6. If the seller refunds $100 to the customer for the product but does not refund the $10 delivery fee, what tax amount can the seller obtain a refund of? a. All tax, $6.60 b. Only tax on the product, $6 c. No tax refund d. Other (explain) Option b b. (sec (2), Wis. Adm. Code) 16 a. WY Dept of Revenue Rules, Chapter 2, Sec 5(f)

17 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 7. If the seller refunds $110 for the product and delivery plus $6.60 in tax, but charges the customer as a separate transaction $15 return delivery fee (to ship the item back to the seller), what tax amount can the seller obtain a refund of? a. All tax ($6.60) b. Only tax on the product ($6) d. No tax refund. N/A Separately stated delivery charges are not subject to tax Option A. A seller may obtain a refund of all tax paid in this situation by keeping and preserving records to support that all tax on the original sale was refunded to the customer. Ark. Code Ann ; Ark. Code Ann ; Gross Receipts Rule GR a. See response to question 6. In this case, the seller refunds the full sales price to the customer (price of product, delivery, and tax) and can qualify for a returned merchandise credit or refund of all the tax paid. NOTE b c. Only tax on the net amount, $95. Conn. Gen. Stat (a)(8)(B)(ii) and (a)(9)(B)(ii) c. Only tax on the net amount, $95 ($110 - $15) a. All tax ($6.60). IC a. All tax ($6.60). However, transportation and delivery charges are not subject to Iowa sales tax when separately contracted for. Iowa Admin. Code r a. All tax ($6.60). The return deliver fee would be treated as a reshelving fee and not taxed. See K.A.R b(a)(4) c. Only tax on the net amount, $95 ($110 - $15) d. No tax refund e. Other (explain) 17

18 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 7. If the seller refunds $110 for the product and delivery plus $6.60 in tax, but charges the customer as a separate transaction $15 return delivery fee (to ship the item back to the seller), what tax amount can the seller obtain a refund of? a. All tax ($6.60) b. Only tax on the product ($6) c. Only tax on the net amount, $95 ($110 - $15) d. No tax refund e. Other (explain) Yes. In this instance, if the merchandise is returned the seller would refund or credit $ to their customer ($ plus $6.60 in sales tax). If the seller subsequently charges a delivery return fee as a separate transaction upon the return of the merchandise, the $15.00 fee would not be subject to the sales tax as it is not a charge in connection with a taxable sale. a. All the tax. The return delivery fee is a separate transaction. If the return delivery fee is truly a separate transaction, the fee would represent a nontaxable service and the answer would be a. a. e. a. All tax 18 NOTE c a. N.J.S.A. 54:32B Option a. N.C. A. All tax Gen. Stat originally paid, A(a) $6.60.

19 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 7. If the seller refunds $110 for the product and delivery plus $6.60 in tax, but charges the customer as a separate transaction $15 return delivery fee (to ship the item back to the seller), what tax amount can the seller obtain a refund of? a. All tax ($6.60) b. Only tax on the product ($6) a. NOTE f. Oklahoma does not tax C the $15 separately stated delivery charges and therefore cannot respond to this question. return fee is considered a restocking fee to the original transaction. A. The $15 return delivery fee will be assessed sales tax in the separate transaction. Per SD Codified Law , services are subject to sales tax. Stand-alone delivery charges are not subject to sales tax. Therefore, the $15 return delivery fee is not subject to tax and is not part of the sales price of a taxable product. The original tax amount credited or refunded to the customer for the returned merchandise is the amount the seller may obtain a credit or refund of. Tenn. Code Ann (a)(1)(A). The seller may take a credit or obtain a refund of the entire amount of sales tax refunded to the customer (i.e. $6.60). The $15 return delivery fee is not taxable. Tex. Tax Code Sections , , and Tex. Admin. e. $6 UT does Code Section not tax delivery a. All tax Option (a). This would be treated as two separate transactions. On return, the seller may obtain a refund of the full tax amount paid ($6.60). The seller s $15 delivery fee is not subject to retail sales tax; the seller would report income for this stand-alone delivery fee under the service and other activities B&O tax classification. c. Only tax on the net amount, $95 ($110 - $15) d. No tax refund e. Other (explain) 19

20 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern by adding that the seller charged a $10 delivery fee on the original sale. The state includes delivery in its definition of Sales Price. The seller collected $ ($100 + $10 + $6.60 tax) from the customer. 7. If the seller refunds $110 for the product and delivery plus $6.60 in tax, but charges the customer as a separate transaction $15 return delivery fee (to ship the item back to the seller), what tax amount can the seller obtain a refund of? a. All tax ($6.60) b. Only tax on the product ($6) c. Only tax on the net amount, $95 ($110 - $15) d. No tax refund e. Other (explain) a c. The seller can obtain a refund of the entire $6.60 on the first transaction. However, the delivery fee is subject to tax so tax will be charged on the second transaction (i.e., $15). Therefore, the answer is the net returned tax amount. (sec (2), Wis. Adm. Code) 20 a. The return delivery fee is a non-taxable service fee, because it is subsequent to the tax moment. WY Dept of Revenue Rules, Chapter 2, Sec 5(f)

21 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern adding that the customer returns the product for an even exchange. 8. What are the tax consequences if the seller provides the customer with store credit of $106 ($100 + $6 tax) for the returned product and issues a new invoice for $106 ($100 + $6 tax) for the newly selected product? NOTE e NOTE b Tax is not refunded to the customer in an even exchange situation unless applicable tax rates have changed, resulting in less tax due on the new transaction. Then that portion of tax paid on the original sale must be refunded to the customer in order for the seller to apply for a refund. The seller would qualify to claim a returned merchandise credit for the tax on the original sale as the qualifications in Regulation 1655 have been met (the full sales price was credited to the customer and the customer was not required to purchase a more expensive item). The subsequent invoice for the newly selected product is a separate transaction and the $6 tax collected should be remitted to the state. NOTE a None 21 No tax consequences if the newly selected product sells for the same price as the returned item: $100. IC (b); IC ; IC (c)(3) In the filing period covering the initial sale, the seller should report the initial sale. In the filing period covering the exchange, the seller should claim credit from the initial sale and report the exchange as a new sale. For the example, the seller s net sales tax remitted is $6. The transaction would be treated as a wash, and the new sale would not be reported as part of the retailers gross receipts. See K.A.R b(a)(3)

22 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern adding that the customer returns the product for an even exchange. 8. What are the tax consequences if the seller provides the customer with store credit of $106 ($100 + $6 tax) for the returned product and issues a new invoice for $106 ($100 + $6 tax) for the newly selected product? NOTE d No tax consequences NOTE b NOTE c None 22 The seller can take a credit for $6 on the rescinded sale and then collect and remit $6 on the new sale. No tax consequence See response to Question # 3. The seller would be entitled to a refund of the amount of sales tax refunded to the customer for the returned product, and for collecting and remitting the sales tax for the newly selected product. Each transaction is separate, but the new purchase transaction offsets the return transaction. Net tax impact is zero.

23 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern adding that the customer returns the product for an even exchange. 8. What are the tax consequences if the seller provides the customer with store credit of $106 ($100 + $6 tax) for the returned product and issues a new invoice for $106 ($100 + $6 tax) for the newly selected product? No additional liability would be due by the vendor. No tax consequences occur as a result of the described transaction. Two separate transactions refund of tax on returned product and subsequent tax due on 2nd sale. New invoice of $100 is subject to tax. Seller entitled to credit of $6 for amount of sales tax refunded on original sale. As there was no refund or change of tax due, the transaction will not need to be reported; however, records will still need to be kept according to SD Administrative Ruling 64:06:01:35, Requir ed records for sales, rentals, and leases. 23 No change. The tax amount credited or refunded to the customer of $6.00 for the returned merchandise is the amount the seller may obtain a credit or refund of. The seller could take a deduction for the sales price of the returned merchandise on its return. The seller must report the new product sales of $ on its return and remit the $6.00 in tax collected. There are no tax consequences relating to an even exchange. The seller s books and records should clearly indicate the transaction involved an exchange. Tex. Tax Code Section no tax due (c)(5) offset None Assuming no tax rate differential, No tax consequence. This would be the treated as two transactions a return where tax of $6 is returned to the customer, and a new purchase for which tax of $6 is collected from the same customer.

24 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern adding that the customer returns the product for an even exchange. 8. What are the tax consequences if the seller provides the customer with store credit of $106 ($100 + $6 tax) for the returned product and issues a new invoice for $106 ($100 + $6 tax) for the newly selected product? N/A No tax consequences on an even exchange if both products are taxable. Tax is refunded on first transaction and charged on second resulting in a net tax of zero. There is no tax consequence because there was an even exchange. Administrative practice as allowed under W.S (b) 24

25 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern adding that the customer exchanges the $100 product for a product with a selling price of $ (Original) Can the seller collect and remit sales tax on the price difference only ($50)? Note f The seller may take a deduction for the value of the returned merchandise; there would be no credit for the tax paid on the original $100 purchase. Therefore, the taxable income on this transaction would be $50, and tax would be imposed on that amount. Yes. NOTE b Assuming that the seller requires the customer to buy an item of greater value in order to process the exchange, the seller must collect and remit tax based on the $150 selling price of the new product. Regulation 1654, subdivision (b)(a) states, in general, when merchandise is traded in on the purchase price No. Tax is due of other merchandise, the retailer accepting the on the full price trade-in must include in of the more the measure of tax the expensive amount agreed upon replacement between seller and buyer as the allowance for the product; IP merchandise traded in. 2011(17). Yes See the answer for #8. For the Yes; IC example, the 5(b); IC seller s net sales 7; IC (c)(3) tax remitted is $9. Yes. See K.A.R b(a)(3) 9. (Follow-up) What amount does the seller collect sales tax on? a. $50 b. Other (explain) 25 b. Other. See the answer for #8. For the example, the seller s net sales tax remitted is $9.

26 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern adding that the customer exchanges the $100 product for a product with a selling price of $ (Original) Can the seller collect and remit sales tax on the price difference only ($50)? 9. (Follow-up) What amount does the seller collect sales tax on? a. $50 b. Other (explain) NOTE d. If the return is handled as a single transaction, the seller will collect and remit sales tax on the price difference ($50.00) on their March 2015 Kentucky Sales and Use Tax Return. No NOTE c Yes a. $50 a. $50 26 No. Two separate transactions have occurred. The seller can take a credit for $6 on the rescinded sale and then collect and remit $9 ($150 x 6%=$9) on the new sale. Yes. See response to Question # 3. Yes Other: the state does not have a trade in allowance so this exchange would have to be done in two separate transactions. (1). The seller returns the $106 to the customer,( 2). The seller charges the full tax on the $150 purchase. Option a NOTE d Note d (Followup) Yes, if the new invoice shows a sale of $50 or if the new invoice shows a return of $100 and a purchase of $150 (for a net sale of $50), the seller may collect tax on $50. NOTE a

27 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern adding that the customer exchanges the $100 product for a product with a selling price of $ (Original) Can the seller collect and remit sales tax on the price difference only ($50)? 9. (Follow-up) What amount does the seller collect sales tax on? a. $50 b. Other (explain) NOTE g. b. NOTE k a. $50 Yes, the seller must record the net difference between the selling price of the item returned and the item delivered to the customer in the exchange as an addition to or deduction from gross sales, whichever is appropriate, on the current month report. For example, under the described scenario, the vendor must report the difference as an addition to gross sales and collect the appropriate amount of sales tax due thereon. Yes if the sales are netted out at the time of the $150 purchase, sales tax is due on the price differential of $50. Yes, there are additional gross receipts to assess sales tax. Gross Receipts defined in Yes, issuing store credit for returned merchandise plus the tax to the customer that the customer then The seller should collect and remit sales tax on the tenders along with price difference. an additional $50 for the purchase of The seller s books a newly selected product(s) does not alter the and records should clearly indicate the outcome. TENN. transaction COMP. R. & REGS. involved an ; Tenn. Code Ann. exchange. Tex (a)(1)(A). Tax Code Section (c)(5) Difference only Yes A. applies only if the exchange was made within 120 days of the original transaction date and with a receipt, otherwise the $ would be subject to sales tax. NOTE g Assuming no rate differential, yes. This would be treated as a return and a new purchase, resulting in the seller reporting an additional tax on the $50 difference in the sales prices. See WAC , Example 4(b).

28 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern adding that the customer exchanges the $100 product for a product with a selling price of $ (Original) Can the seller collect and remit sales tax on the price difference only ($50)? Yes Yes No, the collection and remittance should follow each transaction for audit purposes. W.S (a)(ii), WY Dept of Revenue Rules, Chapter 2, Sec 5(j) 9. (Follow-up) What amount does the seller collect sales tax on? a. $50 b. Other (explain) Option a. $50 28

29 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern such that the customer does not return the product but does request a refund of the tax paid claiming the purchase is not taxable. 10. Can the seller receive a refund of tax from the state prior to refunding the tax to the customer? Code Section 40-2A-7. File joint Petitition Yes if the purchaser can provide an exemption certificate or other documentation establishing that the original sale was exempt from tax, the seller may file an amended return and obtain a refund of the tax paid on the original sale. No. A seller cannot receive a refund of tax prior to refunding the tax to the customer. Ark. Code Ann (d). The only exception allowed is when the seller obtains the consent of the customer to the allowance of the credit or refund to the seller. Ark. Code Ann (d)(3); Gross Receipts Rule GR (C). The seller may claim a refund of the tax paid and provide documentation to support that the sale was tax exempt prior to refunding the tax to the customer. NOTE c 29 No. Conn. Gen. Stat ; Policy Statement 98(5), Sales and Use Tax Refund Policy No. Ga. Comp. R. & Regs (2). No; IC The seller can receive a refund using the procedure described in the answer for #3. No. If the tax is required to be refunded because the customer failed to provide an exemption certificate to the retailer at the time of sale, the retailer must document the fact that it refunded the tax to its customer in the manner required by K.S.A (b)(4)through (6). K.A.R c

30 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern such that the customer does not return the product but does request a refund of the tax paid claiming the purchase is not taxable. 10. Can the seller receive a refund of tax from the state prior to refunding the tax to the customer? No. Tax collected will be refunded to the seller only in situations where they have refunded or credited their customers. The seller must maintain documentation to verify this fact. In no case will the seller be allowed a benefit from tax No. 36 M.R.S. paid No No- tax charged in error can be refunded if it is returned to the customer within 60 days. M.S 289A.50, Subd. 2(c) 30 No. The seller must first refund or credit the tax to the customer. No. NAC No. N.J.S.A. 54:32B-20(a). No. N.C. Gen. Stat A(a) No. The seller must refund the tax or provide a credit memo for the tax to the customer before applying for a credit from the state. N.D.C.C

31 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern such that the customer does not return the product but does request a refund of the tax paid claiming the purchase is not taxable. 10. Can the seller receive a refund of tax from the state prior to refunding the tax to the customer? Yes. NOTE h. No, proof that the sales tax has been refunded to the customer must be made before a refund will be allowed. No tax must be refunded to customer before a seller can claim a refund. No, per SD Administrative Ruling 64:06:01:37, Refunds to Customers. 31 No. Sales or use taxes which were collected from or passed on to customers by the taxpayer shall not be refunded, unless the taxpayer has refunded or credited the sales or use tax to its customers. Tenn. Code Ann (a)(1)(A). No, the seller must refund the sales tax to the customer prior to taking a credit or requesting a refund. The seller s books and records must establish the seller has refunded the sales tax to the customer or has issued a credit to the customer s account with the customer s approval. Tex. Tax Code Section (f) 34 Tex. Admin. Code Section 3.325(a)(2)(A) and 3.325(d)(2)(A) No No. 32 VSA 9781(a). No. The seller is required to first refund the tax to the customer before seeking a tax refund from the Department. However, the seller has the option to get a letter ruling from the Department to confirm the transaction s taxability before refunding the tax to the customer.

32 Post Transaction Survey - STATE West Wisconsin Wyoming Virginia Modify the original fact pattern such that the customer does not return the product but does request a refund of the tax paid claiming the purchase is not taxable. 10. Can the seller receive a refund of tax from the state prior to refunding the tax to the customer? No Yes NOTE a 32 No, the vendor must first refund the tax to the taxpayer. W.S (c)(ii) and WY Dept of Revenue Rules, Chapter 2, Sec 8(b)

33 Post Transaction Survey - STATE Alabama Arizona Arkansas California Connecticut Georgia Indiana Iowa Kansas Modify the original fact pattern such that the customer does not return the product but only pays the seller $100; claiming the sale is exempt. 11. Can the seller obtain a refund of the tax paid to the state? What documentation is needed to support the customer s exemption claim? Yes. Note g NOTE c NOTE c The seller may claim a refund if an overpayment has been made due to tax Yes, but only being remitted on an after the exempt sale. The specific customer has documentation needed to support the refund may provided any vary depending on the required type of exemption claim. exemption In general, the seller certificate and would need to submit after the seller whatever documentation has refunded the customer has to support the sale is tax the tax exempt and evidence that originally paid. the tax was paid. PS 98(5). Assuming the sale is in fact exempt, yes. O.C.G.A To be relieved of burden of proof regarding taxability, seller must take from purchaser a certificate of exemption or resale. O.C.G.A Yes. The customer needs to provide an exemption certificate to the seller. If the seller receives such certificate, the seller does not need to provide evidence of nontaxability to receive a refund from the state. IC The seller can receive a refund using the procedure described in the answer for #3. The seller should obtain an exemption certificate from the customer. Without an exemption certificate, the documentation needed depends on the facts and circumstances of the transaction. Yes, if the customer has provided the retailer with an exemption certificate. Refunds are granted to retailers because of errors they made in tax computation, reporting, or for similar reasons. The required documentation for such refund request is set forth in K.S.A (b) 33

34 Post Transaction Survey - STATE Kentucky Maine Michigan Minnesota Nebraska Nevada New North North Jersey Carolina Dakota Modify the original fact pattern such that the customer does not return the product but only pays the seller $100; claiming the sale is exempt. 11. Can the seller obtain a refund of the tax paid to the state? What documentation is needed to support the customer s exemption claim? NOTE e Only if supported by proper documentation from the customer of a valid exemption and credit is provided to the customer. 36 M.R.S Yes. NOTE d Yes- a valid exemption certificate assuming no upfront exemption exists. Yes. If the customer provides the seller with a properly completed resale or exempt sale certificate within the timeframes noted in Nebraska Sales and Use Tax Regulations A receipt and the or 1- name and , the seller can take a creditor address of the obtain a refund of customer NAC the $ Yes. Fully completed exemption certificate. Proof tax was remitted to the State. Proof customer shortpaid. N.J.S.A. 54:32B-20, N.J.A.C. 18:2-5.8(d)3.iv. Yes. NOTE e Yes, the retailer may apply for a credit or refund of tax paid on an exempt sale if the application is filed within the three year statute of limitations. N.D.C.C Documentation required is generally the original invoice and an exemption certificate. 34

35 Post Transaction Survey - STATE Ohio Oklahoma Rhode South Tennessee Texas Utah Vermont Washington Island Dakota Modify the original fact pattern such that the customer does not return the product but only pays the seller $100; claiming the sale is exempt. 11. Can the seller obtain a refund of the tax paid to the state? What documentation is needed to support the customer s exemption claim? NOTE i. NOTE a. Yes - Seller must provide a credit memo showing sales tax was refunded back to Yes. The customer the customer in all cases. In addition, must provide a a seller may properly obtain an completed exemption exemption certificate from certificate to show the customer, or the purchase is tax the item must be specifically exempt per SD exempt per RIGL 44-Codified Law NOTE c NOTE d yes, exemption certificate Yes. Any documentati on sufficient to show sale was exempt. Yes, a seller may file a refund claim. The required documentation would depend on the reason(s) for the exemption, which may include the customer s reseller permit, exemption certificate, credit notice, receipts, etc. 35