Penalties also are added to and become part of the tax. In contrast to interest, however, a penalty may or may not be recoverable from the purchaser, depending on why it was imposed. This TIR does not address the question of what kinds of penalties, if any, would be recoverable.
T is a calendar year taxpayer.
The sale of the 100 articles must be reclassified as a retail sale. T has no recourse against R except under the private agreement between them that resulted in the original sale, or under other non tax law. If T recovers against R, the amount recovered is subject to the general excise tax. Any recovery by T is treated as additional income from retailing, reported on line 8 on the return for the period in which the income is recognized under T's method of accounting. The sale of the 100 articles must be reclassified as a retail sale.