Rule 15.
(1)
Except as provided in subrules (2) and (3) of this rule, no deduction from the
sales price of a retail sale is allowed for any credit given by the seller for
a trade-in taken in exchange or as partial payment for tangible personal
property and the tax applies to the full selling price.
Example: A customer purchases an LP tank filled with
propane gas for the sales price of $49.95. Tax is due on the sales price of
$49.95. Months later, the customer returns for more propane gas, trades in an
empty LP tank, and receives an LP tank full of propane gas. The customer is
charged $24.95, and the seller credits $25.00 for the empty LP tank traded in.
No deduction is allowed for the empty LP tank taken in trade on the
transaction. Tax is due on the total amount of $49.95, $24.95 plus $25.00,
without a reduction for the trade-in amount.
(2) Credit given by a seller, except for
rentals and leases, is not part of the sales price and is not subject to tax if
the agreed-upon value is separately stated on the invoice, bill of sale, or
similar document given to the purchaser, in the following circumstances:
(a) Credit for the agreed-upon value of a
titled watercraft used as part payment of the purchase price of a new titled
watercraft or used titled watercraft purchased from a watercraft
dealer.
(b) Credit for the
agreed-upon value of a motor vehicle used as part payment of the purchase price
of a new or used motor vehicle or new or used recreational vehicle purchased
from a dealer. This deduction does not apply to a recreational vehicle used as
part payment for a motor vehicle. This deduction is limited, as follows:
(i) Beginning January 1, 2019, the lesser of
the following:
(A) $5,000.00. Beginning
January 1, 2020, and each January 1 after that, this limit is increased by
$1,000.00.
(B) The agreed-upon
value of the motor vehicle used as part payment.
(ii) Beginning January 1, 2029, the full
agreed-upon value of the traded-in motor vehicle is eligible for the
deduction.
(iii) Beginning January
1, 2018, credit for the full agreed-upon value of a recreational vehicle used
as part payment for a new or used recreational vehicle purchased from a dealer.
Example: A customer purchases a new motor vehicle on
February 1, 2019 from a dealer for $25,000.00. The dealer agrees to take the
customer's used motor vehicle in on trade and agrees to credit the customer
$10,000.00 for the traded in vehicle. The customer pays the remaining
$15,000.00 through a financing agreement. Only up to $5,000.00 of the trade-in
vehicle is eligible for the deduction, therefore, the taxable sales price of
the vehicle is $20,000.00.
(3) Beginning January 1, 2017, credit for the
core charge attributable to a recycling fee, deposit, or disposal fee for a
motor vehicle or recreational vehicle part or battery is deductible from the
sales price if the recycling fee, deposit, or disposal fee is separately stated
on the invoice, bill of sale, or similar document given to the purchaser.
Example: A retailer sells a customer a car battery for
$100.00. The invoice given to the customer separately itemizes a $20.00 charge
for a recycling fee for the battery. The taxable sales price of the battery is
$80.00.
(4) Tangible
personal property acquired by the seller through a trade-in that is later sold
at retail is subject to sales tax on the full sales price.
