South Carolina DOR Determines Sales Taxability of Optional Extended Warranty, Withdrawals From Inventory

June 14, 2021, 5:00 AM

The South Carolina Department of Revenue (DOR) June 8 determined in a letter ruling the sales and use taxability of an optional extended warranty and withdrawals of parts from inventory. Taxpayer sold medical equipment with a free new product limited warranty. Customers could also purchase an extended warranty at any time. Taxpayer withdrew parts to repair medical equipment under both warranties. The DOR concluded: 1) the extended warranties sold in conjunction with the sales of equipment were included in the “gross proceeds of sales” or the “sales price” and were therefore taxable, unless the transactions were otherwise exempt; 2) the ...

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