Laws, Regulations and Annotations
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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
G
295.0000 Gross Receipts
Annotation 295.0720
(a) General
295.0720 Suit Clubs. A merchant organizes a suit club for a fraternal organization whose members will pay a specified amount each week for fifty weeks, at which time the merchant will provide the member a suit. In addition, each week the name of a member is drawn. The winner obtains a suit and may at that time cease his weekly payments. Alternatively, the member can continue to make his weekly payments and he will receive a second suit. The fraternal organization receives a percentage of the receipts and the balance is paid to the merchant.
The merchant is making taxable retail sales of all suits, including those furnished to the weekly winner. A seller may not deduct from the measure of sales tax the costs of salesmen's commissions. Here, however, the merchant is not paying the fraternal organization a commission. Rather, its members are making a contribution to their organization as part of the suit club. Only the amounts actually paid to the merchant are subject to tax. 4/18/52.