Section 81-04.1-01-20 - Repossessed and returned propertyWhen tangible personal property which has been repossessed by the original seller or by a finance company is resold, the entire gross receipts from such sales are taxable.
When retailers sell tangible personal property on time payments, and it becomes necessary for the retailer to repossess the tangible personal property, the transaction is handled as follows:
1. If the retailer previously included the total selling price of the tangible personal property in the retailer's gross sales and remitted tax to the tax commissioner but did not collect sales tax from the buyer, the retailer may enter a credit in the amount of the unpaid balance of the original sale. This credit is deductible by the retailer regardless of whether or not the retailer has assigned the installment contract. If the retailer assigns the contract, it must be assigned subject to an agreement to repurchase it in the event of default by the purchaser under the contract or subject to a guarantee that the payment under the contract will be made. 2. If the retailer collected and remitted the full amount of sales tax on the full sales price at the time of sale, the retailer is not entitled to take a deduction for the goods returned unless the tax is returned to the purchaser on the unpaid balance. 3. If the retailer included in gross receipts only the amount of cash actually received from the sale and did not collect full sales tax from the customer, no credit for return of the repossessed property to the retailer's stock will be allowed. When goods are returned to a retailer, and the purchase price is returned to the buyer, the retailer may claim a credit on a subsequent sales and use tax return for the amount of the sale claimed on a prior return if the previously paid tax is returned to the customer.
N.D. Admin Code 81-04.1-01-20
General Authority: NDCC 57-39.2-19
Law Implemented: NDCC 57-39.2-01, 57-39.2-02.1, 57-39.2-05, 57-39.2-24, 57-39.2-27