12/19/2001

Sales Tax on Cores

STATE OF OHIO
DEPARTMENT OF TAXATION
STATE OFFICE TOWER
P. 0. BOX 530
COLUMBUS, OHIO 43216


March 22, 1982



INFORMATIONAL RELEASE


SUBJECT:CORE CHARGES


The purpose of this Informational Release is to restate the department’s position with respect to the application of sales tax to the subject charges. Core charge is often referred to as a deposit and is held by the vendor to assure that the customer brings in the old part. The price of the new or rebuilt part is generally quoted as an amount certain either including the core charge (deposit) or plus the core charge (deposit) i.e. $39.95 or $29.95 plus $10.00 deposit.

The Ohio sales tax law defines "Price" as the aggregate value in money paid in the complete performance of a retail sale without any deductions for such items as trade-ins. Therefore the selling price in the example quoted above is $39.95 and the sales tax is due on that amount.

A deposit or core charge collected on a retail sale to insure that a used part is returned is subject to the sales tax.

Such "deposits", "charges" or "allowances" are considered to be part of the price under the law and are not deductible for purposes of establishing a lower tax base and the refund of tax on such charges will subject the vendor to assessment.

An example is as follows ... A starter sells for $39.95 including the core charge or for $29.95 plus a $10.00 deposit. The tax base is $39.95 in either case. When the used starter is returned the $10.00 may be refunded by the dealer but the law does not authorize a refund of the tax.