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BTLG Table of Contents > Sales and Use Tax Annotations > R > 490.0000 Returns, Defects and Replacements > Annotation 490.0620

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R

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490.0000 Returns, Defects and Replacements—Regulation 1655

Annotation 490.0620

(c) Warranties

(2) Warranty Charges—When Includable In Tax Measure

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490.0620 Parts Furnished by Dealer Under Used Car Warranty. An automobile dealer sells optional warranties to purchasers of qualified used cars on behalf of the manufacturer of the cars. The premiums are paid over to the manufacturer. When a purchaser makes a claim on the dealer for service under the warranty, he is required to pay the dealer a maximum of $25. The dealer performs the warranty work, making out an invoice with separately stated charges for parts and labor, which he submits to the manufacturer. The manufacturer pays the dealer the amount of the billing, less the $25 paid by the purchaser. Under such circumstances, the original premium paid by the purchaser for the warranty is not part of the dealer's taxable gross receipts. The dealer, however, is the retailer of the parts furnished under the warranty and sales tax is applicable to the selling price of such parts. 11/30/66.