SALES AND USE TAXES: FINANCE AND ADMINISTRATION CABINET V. DUPLICATOR SALES AND SERVICE (COA 8/17/2007)

FINANCE AND ADMINISTRATION CABINET V. DUPLICATOR SALES AND SERVICE
REVENUE AND TAXATION:   Use tax versus sales tax
2006-CA-001783
PUBLISHED: AFFIRMING
PANEL: KELLER PRESIDING; VANMETER, GUIDUGLI CONCUR
FROM: WORKERS COMP BOARD
DATE RENDERED: 8/17/2007

The Finance and Administration Cabinet, Department of Revenue appealed Franklin Circuit Court’s Opinion and Order upholding the decision of the Kentucky Board of Tax Appeals that reversed its assessment of sales and/or use tax against Duplicator Sales and Service, Inc. COA affirmed.

The issue in this case is whether Duplicator was the consumer or retailer of the parts and supplies it used in fulfilling its warranty or maintenance contracts.  Ultimately, the question is whether the parts and supplies are subject to sales tax, which would be assessed against Duplicator’s customers that are subject to sales tax, or use tax, which would be assessed against Duplicator in every transaction, regardless of the tax status of the customer.

COA held such transactions constitute retail sales requiring the imposition of sales tax against the customers.

Digested by Michael Stevens