Tax Rules: Final: 5703-9
5703-9-17 Conditional sales
(A) A "conditional sale" is a transaction in which the vendor
retains a security interest in the tangible personal property
sold to insure fulfillment of one or more conditions before
full ownership is granted to the consumer. A "layaway sale"
is a conditional sale in which the vendor transfers title but
retains possession of the property sold. An "approval sale"
is a conditional sale in which the vendor transfers
possession but retains title to the property sold. A lease
under the terms of which the lessee is obligated to accept
ownership and to pay for tangible personal property at a
future time is a conditional sale. A lease which does not so
obligate the lessee is not a conditional sale and tax must be
collected either at the time the lease is consummated or on
periodic billings as specified in divisions (H)(1) and ((H)4)
of section 5739.01 of the Revised Code and divisions (G)(1)
and (G)(4) of section 5741.01 of the Revised Code.
(B) A conditional sale is effected at the time and place of
acceptance of the purchase offer by the vendor. The sales tax
must be charged on the full agreed price at that time and
reported on the vendor's return for the period in which the
sale is effected.
(C) In the event the consumer fails to fulfill the conditions
of the sale so that title and possession revert to the
vendor, the vendor may treat the transaction as one involving
returned merchandise in accordance with rule 5703-9-11 of the
Administrative Code if it is shown that the vendor refunded
the full amount of all payments made by the consumer,
including the sales or use tax paid. The transaction may
otherwise be treated as a bad debt in accordance with section
5739.121 of the Revised Code and rule 5703-9-44 of the
Administrative Code.
Effective: 4-28-03
Promulgated under: 5703.14
Authorized by: 5703.05
Amplifies: 5739.01, 5739.12, 5739.121
Prior effective dates: 5-11-55, 1-1-62, 7-2-81