How is returned merchandise that qualifies as a single article of tangible personal property with a price greater than $1,600 reported on the sales tax return to claim credit for the refunded sales tax?

If an item that was included in Gross Sales on Line 1 on a previous or current tax return is returned, and the retailer refunds the purchaser the full price plus sales tax collected, then adjustments on the sales tax return are required to claim credit for the refunded tax. 

To illustrate, a ring that sold in May for $3,500 was returned in July.  The retailer, on its July return, will report $3,500 on Schedule A, Line 5 Returned Merchandise.  On Schedule B, Line 2 Adjustments, the retailer will report $1,900 (the amount of the ring in excess of the $1,600 local option single article tax limitation that was previously reported in May on Schedule B, Line 4).  On Schedule C, Line 1 Single Article Sales from $1,600–$3,200, the retailer will deduct $1,600 (the amount on which the previously paid state single article sales tax was calculated).

Note, if a retailer does not report the original sale of the item in Gross Sales Line 1 because the item was returned in the same month, the retailer should not claim credit for the refunded tax.

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