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BTLG Table of Contents > Sales and Use Tax Annotations > C > 200.0000 Credit Sales and Repossessions > Annotation 200.0160

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C

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200.0000 Credit Sales and Repossessions—Regulation 1641

Annotation 200.0160

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200.0160 Lay-Away Sales. The application of the tax to lay-away sales depends on whether a present sale is intended when the deposit is made, or whether a sale is intended to be made when the full purchase price is paid and the customer receives delivery of the merchandise. The intent of the parties can be determined by how the initial transaction is handled on the seller's books and records and by the custom of the trade.

According to the custom of the trade a lay-away transaction is considered as a contract to sell at a future date; the initial payment is considered as a deposit and the parties understand that future payments must be made prior to delivery. If the deposit is forfeited, the full sales price is not includable in the taxpayer's gross receipts.

Even if the taxpayer keeps his books in such a fashion as to indicate that present sales were made, there is no taxable sale until the full purchase price is paid, unless the parties agree that title will pass at an earlier date. 5/27/59.