Opinion ID: 2605783
Heading Depth: 1
Heading Rank: 3

Heading: Regulation 138-5-11

Text: Pursuant to section 39-21-112, C.R.S. 1973, the Director is empowered to adopt, amend, or rescind rules and regulations which are consistent with the provisions of article 26 of title 39, C.R.S.1973 (Sales Tax Act). Section 39-26-122, C.R.S.1973, causes the administration of the Sales Tax Act to be vested in and exercised by the Director of the Department of Revenue who has the power to prescribe forms and reasonable rules and regulations for the ascertainment and assessment of taxes. Section 39-26-111, C.R.S.1973, provides in part: In case of a sale upon credit ... there shall be paid upon each payment, upon the account of purchase price, that portion of the total tax which the amount paid bears in the total purchase price.... (Emphasis added.) Regulation 138-5-11, C.C.R., provides in part: When the retailer on a time payment plan, conditional sale, or a sales secured by a chattel mortgage, negotiates or sells the finance paper, he is deemed to have received the full balance of the consideration for the original sale and is liable for the remittance of the sales tax on the balance of the total sales price not previously reported, which amount shall be included in the return for the month during which the paper was assigned, negotiated or sold. (Emphasis added.) [4] Wards claims that section 39-26-111, C.R.S.1973, declares that payment of an account constitutes the tax event which requires payment of sales tax, and that Regulation 138-5-11, C.C.R. changes the event which triggers payment of tax to the sale of the account. Wards' theory is that Regulation 138-5-11, C.C.R., is void because it is inconsistent with section 39-26-111, C.R. S.1973. We conclude that Regulation 138-5-11, C.C.R., is not inconsistent with section XX-XX-XXX, C.R.S.1973. Accordingly, the regulation is a valid exercise of the Director's authority under sections 39-21-112 and 39-26-122, C.R.S.1973. When Wards divested itself of its interest in the accounts receivable by sale to a third party, it received payment for the accounts including the tax owing on said accounts. Thus, Wards received payment of the purchase price for the account within the meaning of section 39-26-111, C.R.S.1973. The finality of the sale is evidenced by the fact that Wards imposed the condition that the sale was without recourse.