12 CSR 10-103.200 - Isolated or Occasional Sale
(1) In general, sales of tangible personal
property are subject to tax only if the taxpayer is engaged in the business of
making such sales. Isolated or occasional sales by a person not engaged in the
business generally are not taxable. There are exceptions to this rule based on
the frequency of such sales and total dollars of annual sales.
(2) Definition of Terms.
(A) Business-any activity engaged in by a
person, or caused to be engaged in by the person, with the object of direct or
indirect gain, benefit, or advantage.
(B) Non-business enterprise-any activity
engaged in by a person that is not part of the person's business.
(C) Person-any individual or group acting as
a unit.
(3) Basic
Application.
(A) Isolated or occasional sales
of tangible personal property made by persons not engaged in the business of
selling such property are not subject to tax if the gross receipts from all
such sales are less than three thousand dollars ($3,000) in a calendar
year.
(B) Factors which are
considered in deciding if a taxpayer is engaged in business include, but are
not limited to, the following criteria:
1.
Holding out as being engaged in business by the seller, such as advertising in
telephone books, media advertising, solicitation, etc.;
2. Frequency and duration of sales;
and
3. The nature of the market for
the service or property sold or leased.
(C) If annual sales exceed three thousand
dollars ($3,000) in a calendar year, such sales will not be considered isolated
or occasional, even though the taxpayer is not regularly engaged in the
business of selling such products.
(D) Sales made in the partial or complete
liquidation of a household, farm, or nonbusiness enterprise are not included in
the three thousand dollars ($3,000) threshold. These sales are not
taxable.
(4) Examples.
(A) A grocery store sells a used cash
register for $1,000. No other non-inventory items are sold during the year.
This would qualify as an isolated or occasional sale, and would not be subject
to tax.
(B) Same facts as in (A),
except that the taxpayer sells used cash registers and fixtures that total
$4,000 during the calendar year. The taxpayer replaces these cash registers and
fixtures by purchasing new models. The total $4,000 of these sales is subject
to tax.
(C) Same facts as in (B),
except that the taxpayer does not replace the cash registers or fixtures. This
would qualify as a partial liquidation of a nonbusiness enterprise. Therefore,
the sales are not subject to tax even though the gross receipts exceed $3,000
in a calendar year.
(D) A
barbershop sells tangible personal property (shampoo, combs, etc.) as a regular
part of its ongoing business. These sales are subject to sales tax even if the
gross receipts are less than $3,000 in a calendar year.
(E) A construction company buys new equipment
every few years, and sells its used equipment to other construction businesses.
Gross receipts from these sales exceed $3,000 in a calendar year. The
construction company is required to collect tax on the sale of the used
equipment.
(F) A homeowner holds a
weekend garage sale once a year. As long as the property was not created with
the intent to sell or purchased for resale, the sale of the merchandise is not
subject to tax because the garage sale qualifies as a partial liquidation of a
household.
(G) A person regularly
attends garage sales. He buys merchandise that he intends to sell at his
monthly garage sales. The gross receipts from his garage sales are taxable even
if they do not exceed $3,000 because he is in the business of operating garage
sales.
Notes
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