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BTLG Table of Contents > Sales and Use Tax Annotations > R > 490.0000 Returns, Defects and Replacements > Annotation 490.0630

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R

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490.0000 Returns, Defects and Replacements—Regulation 1655

Annotation 490.0630

(c) Warranties

(2) Warranty Charges—When Includable In Tax Measure

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490.0630 Performance Bonds. A taxpayer manufactures and sells fire trucks. Some buyers require the taxpayer to obtain performance bonds in order to assure that the trucks perform to specification. The bond is in the taxpayer's name. The cost of the bond is passed on the buyers as a separate charge on the invoice. Since the bond is not required by the taxpayer as a condition of the sale, the charge is regarded as a charge for an optional warranty. The charge passed on to the buyers is not subject to tax. 2/23/95.