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BTLG Table of Contents > Sales and Use Tax Annotations > G > 290.0000 Goods Damaged in Transit > Annotation 290.0150

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G

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290.0000 Goods Damaged in Transit—REGULATION 1629

Annotation 290.0150

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290.0150 Resale Merchandise. Resale merchandise shipped by a manufacturer to a retailer via a common carrier is damaged in transit. A credit is issued to the retailer, replacement merchandise is shipped, and a new billing is issued. The manufacturer bills the carrier for the damaged merchandise. The transactions with the retailer do not result in any tax liability because the original sale was nullified by the credit issued and the subsequent sale was a sale for resale. Assuming that the carrier acquires possession of and title to the damaged goods, tax applies to the portion of the amount paid by the carrier representing the fair retail value of the goods in their damaged condition unless the carrier issues a resale certificate and resells the damaged property. If the property is so badly damaged that is must be junked by the carrier, there is no tax on the billing to the carrier as the fair retail value of the damaged goods would be zero. 8/14/78.