Evening star., 1949-07-31
You and the D. c. SoIes Tux
You and the D. c. SoIes Tox
Date of Purchase Determines
Tax on Credit, InstoI|ment Sales
Last of a SerieSJ

Last of a SeriesJ
Among the questions showering
sales tax officials these days is
this one: "Is it necessary to pay
tax on merchandise purchased on
credit before the effective date of
the sales taX?"
Like hundreds of other situa-
tions arising from the new law,
special sections of the regulations
were written to cover installment
and lay-away purchases made be-
fore collections begin tomorrow.
AS in law, possession seems to
be nine points in determining
whether tax should or should not
be paid on transactions made be-
tween May 26, when the sales tax
became law, and August /. In
any case of installment or credit
buying where the customer OBJ
tanned possession of or title to the
property there is no tax. Ex-
amples:
Pays If Not in Possession.
@. A $500 fur coat is purchased
on lay-away plan, with 500
given as a deposit on July Is, and
the remainder due on delivery
after August /. What is the tax?
A. Since the buyer is not in
possession of the coat. she must
pay tax on all but the 500 de-
post.
@. The same coat is purchased
by charge account on the same
date. The customer takes the
coat then. but arranges to pay
the entire amount after August
/. What is the tax?
A. There is no tax. since the
coat is in possession of the GUS
toner.
@. How is tax collected on in
stallment purchases made on or
after August 1?
A. The dealer has the choice
of collecting the entire tax at
the time of the sale, or as the
installments fall due. In report
ing and remitting his tax. the
dealer may either compute the
total tax on one return. or pay
a pro-rata portion each install
ment. He is required to use one
reporting method or the other for
all customers.
Tax On Contracts.
! @. Is there a tax on contracts
made before May 27?
A. In written and signed con-
tracts, where there is specific
agreement that the sales tax shall
not apply, there is no tax.
@. How will the sales tax affect
new building, repairs and altera-
tions?
! A. Materials used will be taxed
with either the contractor or the
customer bearing the expense.
O. Under what conditions is the
customer required to pay the tax?
A. If the contractor bills the
customer separately for the ma
terial and labor, the customer is
required to pay the tax.
@. What if the contractor fur
nishes materials, and labor for a
lump sum?
4 A. Then he either pays his sup
rJier tax on the materials or files
a use tax on them In either case
he, and not the customer, pays the
tax.
@. In what other Cases is the
contractor liable for the tax?
A. If he agrees to furnish ma.
terials and services on cost
plus basis o. with all upset OF
guaranteed price" which may moi
be exceeded.
No Tax on Dwellings.
Q. Is there a tax on rentals?
A. There is no tax on dwell
> ings Business places and the like
However. here is a tax on rental.
of property which cannot lie pur.
! chased outright, such as some
, office equipment and machines
, when they remain in the rentor'.
| possession over a period of time
@. Is there tax on such rental.
, as folding chairs and artif1cia
flowers used for one occasion?
A. No, when the rental is fol
"one occasion" there is no tax.
: Q. Do automobiles fall under
{ the Sales Tax Act?
A. There is no tax on the actua.