Section 33.3. Cancellations, returns, allowances and exchanges

(a) Tax not remitted to the Department. The following deduction is permitted only if the tax has been returned to the purchaser or the purchaser’s account has been credited for the amount of tax. The seller shall deduct from the amount of gross and taxable sales for a reporting period, a sale or allowance, when in the same reporting period as a taxable sale:

(1) The contract of sale has been cancelled.

(2) Property is returned.

(3) Allowance is made by reason of the merchandise being defective.

(4) An exemption certificate, executed under § 32.2 (relating to exemption certificates), is presented by the purchaser to the seller.

(b) Tax remitted to the Department.

(1) If the tax has not been returned to the purchaser or credited to his account, the purchaser may file a claim for credit or refund with the Department for the tax. If the tax has been returned to the purchaser or credited to his account, the purchaser may assign his rights to the seller for the tax remitted to the Department and the seller may file a claim for refund or credit for the tax.

(2) The following deduction is permitted if the sale amount and corresponding amount of tax has been returned to the purchaser or the purchaser’s account has been credited for the sales amount and corresponding amount of tax. The seller shall deduct from the amount of gross and taxable sales for a succeeding reporting period, the amount of a sale or allowance, when in a prior reporting period it was reported as a taxable sale and one of the following applies:

(i) The contract of sale has been cancelled.

(ii) The property is returned.

(iii) An allowance is made by reason of the merchandise being defective.

(iv) An exemption certificate, executed under § 32.2, is presented by the purchaser to the seller.

(3) A seller claiming the credit shall maintain records of transactions for which the credit is claimed. The records shall show the name and address of the person to whom the tax was returned, the reason for the return and the amount of tax returned.

(c) Repossession. The repossession of property by a seller is not considered to be a cancelled or return sale. Therefore, sales tax shall be due upon the full original purchase price within 30 days of the sale whether or not the property was later repossessed by the seller.

(d) Bad debts. A seller may not be permitted to take a sales tax credit for amounts representing bad debts or uncollectible accounts. The tax remains due upon the original purchase price of the property sold.

The provisions of this § 33.3 amended March 14, 1986, effective March 15, 1986, 16 Pa.B. 814. Immediately preceding text appears at serial pages (40300) to (40301).

Notation

Authority

The provisions of this § 33.3 issued under section 270 of the Tax Reform Code of 1971 (72 P. S. § 7270).

Cross References

This section cited in 61 Pa. Code § 33.4 (relating to credit and lay-away sales).