SUT-26 - Sales Tax Filing - Reporting Returned Merchandise - Amounts Greater Than Single Article Limitation

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

To illustrate, a ring that was sold in May for $3,500 was returned in July.  The retailer will report on its July return $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 on Line 1 of the current sales tax return because the item was returned in the same month, the retailer should not claim credit for the refunded tax.


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