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Proposed Amendments to the Streamlined Sales and Use Tax Agreement

 

A motion by Nebraska to amend the definition of a bundled transaction in the Library of Definitions:

Appendix C

LIBRARY OF DEFINITIONS

PART I

Administrative Definitions

A “bundled transaction” is the retail sale of two or more products, except real property and services to real property, where (1) the products are otherwise distinct and identifiable, and (2) the products are sold for one non-itemized price.  A “bundled transaction” does not include the sale of any products in which the “sales price” varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.

(A)    “Distinct and identifiable products” does not include:

Packaging – such as containers, boxes, sacks, bags, and bottles – or other materials – such as wrapping, labels, tags, and instruction guides – that accompany the “retail sale” of the products and are incidental or immaterial to the “retail sale” thereof.  Examples of packaging that are incidental or immaterial include grocery sacks, shoeboxes, dry cleaning garment bags and express delivery envelopes and boxes.

A product provided free of charge with the required purchase of another product.  A product is “provided free of charge” if the “sales price” of the product purchased does not vary depending on the inclusion of the product “provided free of charge.”

Items included in the member state’s definition of “sales price,” pursuant to Appendix C of the Agreement.

(B)    The term “one non-itemized price” does not include a price that is separately identified by product on binding sales or other supporting sales-related documentation made available to the customer in paper or electronic form including, but not limited to an invoice, bill of sale, receipt, contract, service agreement, lease agreement, periodic notice of rates and services, rate card, or price list.

(C)    A transaction that otherwise meets the definition of a “bundled transaction” as defined above, is not a “bundled transaction” if it is:

      (1)  The “retail sale” of tangible personal property and a service where the tangible personal property is essential to the use of the service, and is provided exclusively in connection with the service, and the true object of the transaction is the service; or

      (2)  The “retail sale” of services where one service is provided that is essential to the use or receipt of a second service and the first service is provided exclusively in connection with the second service and the true object of the transaction is the second service; or

      (3)  A transaction that includes taxable products and nontaxable products and the “purchase price” or “sales price” of the taxable products is de minimis.

      (a)        De minimis means the seller’s “purchase price” or “sales price” of the taxable products is both: equal to or less than ten thousand dollars ($10,000.00), and ten percent (10%) or less of the total “purchase price” or “sales price” of the bundled products.

      (b)        Sellers shall use either the “purchase price” or the “sales price” of the products to determine if the taxable products are de minimis.  Sellers may not use a combination of the “purchase price” and “sales price” of the products to determine if the taxable products are de minimis.

      (c)        Sellers shall use the full term of a service contract to determine if the taxable products are de minimis; or

(4) The “retail sale” of exempt tangible personal property and taxable tangible personal property where:

            (1) the transaction includes “food and food ingredients”, “drugs”, “durable medical equipment”, “mobility enhancing equipment”, “over-the-counter drugs”, “prosthetic devices” (all as defined in Appendix C) or medical supplies; and

            (2) where the seller's “purchase price” or “sales price” of the taxable tangible personal property is fifty percent (50%) or less of the total “purchase price” or “sales price” of the bundled tangible personal property.  Sellers may not use a combination of the “purchase price” and “sales price” of the tangible personal property when making the fifty percent (50%) determination for a transaction.