Consignment Sales (Publication 114)

Instead of making direct sales, individuals and businesses often place goods with others who sell the items for them. These types of transactions are commonly called "consignment sales." In most cases, the owner of the item (the "consignor") and the seller (the "consignee") need to register with us to obtain a seller’s permit (Regulation 1569, Consignees and Lienors of Tangible Personal Property for Sale). In addition to the consignee reporting and paying the tax for the sales they make on consignment, the consignor must also include in their total sales, the amount they receive from the consignee on their sales and use tax return. The consignor may be able to deduct the amount received from the consignee from their total sales. Please see Placing Items on Consignment for more information.

If you are not engaged in business as a seller and you make two or fewer sales in any twelve-month period, your sales are generally considered "occasional sales," and you do not have to register for a seller’s permit or report those two sales (Regulation 1595, Occasional Sales—Sale of a Business—Business Reorganization).

I sell items placed with me on consignment. When is my consignment sale considered a retail sale?

You are responsible for obtaining a seller's permit and paying the sales tax on the retail selling price of consignment sales when you:

  • Have possession or control of the item you are selling, and
  • Can transfer ownership or use of the item to the buyer without further action on the part of the owner.

For example, you may own a jewelry store where you sell jewelry on consignment. Typically, the owner of the jewelry will bring it to you and sign an agreement that authorizes you to sell the item and transfer ownership to the buyer. You are considered the retailer of jewelry you sell in this way and must pay sales tax based on your retail selling price.

If you make sales on behalf of others, and those sales do not meet the two conditions described above, please read see Broker Sales.

Please note : This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.

Revision 1-24