Re: Tax on core charge...

Trade-ins and Core Charges (Maryland)

If you accept trade-ins or require the exchange of a used item or core when making sales, you must charge tax on both the cash paid and the value of the trade-in or exchange.

For example, if you sell a starter for $54 in cash and collect $10 as security for a trade-in of an old starter, you must collect tax on $64, the cash price of the new starter plus the value of the anticipated trade-in. When the customer turns in the old starter, you do not refund the tax on the $10, which you refund to the customer.

Selected re-manufactured parts exempt

The tax does not apply to core charges made in connection with sales of these re-manufactured truck parts and their components:

Air brake systems Engines Rear axle carriers Transmissions.

So MD apparently sees this as 2 separate transactions. Customer buys the starter for $64. Store collects tax on $64

Then the store *buys* the old part for $10. The seller/customer can't collect a tax from the store. (Beside the store has a resellers' exemption anyway)

The words "core charge" should not even be used in this transaction.

And why some truck parts are exempt must be a sweet-heart deal for the industry. ;-)

For those that come across this post as I have, here's California's stance on this topic...

315.0370 Core Deposits. New Parts: The customer purchases the parts, leaves a core deposit, and is charged tax on the total. Later, the customer brings in a used part. Under these circumstances, the customer would be entitled to a refund or credit for the core deposit only. Tax paid with respect to the core deposit should not be refunded or credited to the customer.

Reconditioned Parts: The customer purchases the part, leaves a deposit, and is charged tax on the total. Later, the customer brings in a used part. Under these circumstances, the customer would be entitled to a credit or refund of the core deposit plus tax paid with respect to it.