| (1) Acceptable trade-in. The sales price of a taxable
item does not include the value of a trade-in that a seller takes
as all or part of the consideration for a sale of a taxable item of
the same type that is normally sold in the seller's regular course
of business. For example, sales and use tax will be due only on the
difference between the amount allowed on an old piano taken in trade
and the sales price of a new piano.
(2) Unacceptable trade-in. The sales price of a taxable
item does include the value of a trade-in that a seller takes as all
or part of the consideration for the sale of a taxable item, if the
trade-in is a different type from the type normally sold by the seller
in the regular course of business. For example, a seller who sells
only pianos who takes a desk in trade as part of the sales price of
a piano collects sales and use tax on the retail sales price of the
piano without any deduction for the value of the desk. In this situation,
the seller and buyer are considered to be bartering. However, if the
seller of pianos is also a seller of desks, the value of the desk
is allowed as a trade-in.
(3) Tax free items traded-in. Sellers who remove items
from a tax-free inventory for use as a trade-in owe sales and use
tax on their purchase price of the items. If both parties to a transaction
remove items from a tax-free inventory to trade for other items that
each party will use, the transaction is regarded as bartering by both
parties. Each party to the barter is required to collect sales and
use tax on the retail sales price of the item being transferred. For
example, a seller of drill pipe trades pipe to a seller of appliances
in exchange for a refrigerator. Both sellers are trading the respective
items for use, not resale. The pipe seller must collect sales tax
on the retail sales price of the pipe. The appliance seller must collect
sales tax on the retail sales price of the refrigerator. See §3.336
of this title (relating to Currency, Certain Coins, and Gold, Silver,
and Platinum Bullion) for information on persons who barter for taxable
items with gold, silver, diamonds, or precious metals.
(g) Tax Code, §111.064, provides that interest
will be paid on tax amounts found to be erroneously paid and claimed
on a request for refund or in an audit. See also §3.325 of this
title. Tax paid on an account that is later determined to be uncollectible
and written off as a bad debt for federal tax purposes is not tax
paid in error and does not accrue interest.
|
| Source Note: The provisions of this §3.302 adopted to be effective January 1, 1976; amended to be effective November 14, 1984, 9 TexReg 5583; amended to be effective September 16, 1985, 10 TexReg 3323; amended to be effective December 4, 2000, 25 TexReg 11963; amended to be effective November 21, 2002, 27 TexReg 10744; amended to be effective January 6, 2022, 46 TexReg 9410 |
