Section 9-466. SALES OF REPAIR OR REPLACEMENT PARTS ON AN EXCHANGE BASIS

 

466.1In many instances repair or replacement parts for automobiles, electronic equipment, washing machines, electrical appliances, and other equipment are sold on an exchange or trade-in basis, and an allowance is given by the vendor for the value of an old part towards the purchase price of a new, rebuilt, or reconditioned part. This credit may be called an "exchange allowance," "trade-in allowance," "deposit allowance," or "dud allowance."

 

466.2The taxable sales price of a new, rebuilt, or reconditioned part shall include the amount of any allowance or credit given for the value of an old part exchanged or traded.

 

466.3In some cases, especially in the automotive parts business, the listed price of a part is the exchange price and a "deposit" is charged the customer to ensure that the customer will return with the old part. The deposit shall be considered to be the value of the old part and must be included in the taxable sales price of the new or rebuilt part.

 

466.4If the customer has the old part and turns it in at the time of sale, the amount of the deposit usually charged on that particular item shall be added to the exchange price and tax charged on the total.

 

source

Administrative Ruling No. 17, 16 DCRR.