County Bulletin
TO: All County Auditors - Bulletin No. 82
DATE: December 27, 1954
FROM: Stanley J. Bowers, Tax Commissioner
RE: Farm Implements and Equipment in the Possession of Ohio
Resident Dealers
In many instances, farm implement dealers have not returned
for taxation items of farm equipment in their possession
under "conditional sales contracts" wherein are stipulated
provisions that title will be vested with either the
manufacturer of the article or a financing agency until full
payment is received from the dealer.
Under these contracts the dealer is not obligated to pay for
any portion of the merchandise received by him until such
time as he makes a sale to his customer and the argument has
been advanced by the dealer that by reason of this
stipulation he is not the owner and therefore should not be
required to list the inventory for purposes of personal
property tax.
We have found manufacturers who are engaged quite extensively
in supplying great quantities of farm implements to Ohio
dealers under conditional sales contracts and the examiners
of this department have been led to believe that the goods
are on consignment to the dealer and should therefore be
listed by the manufacturer.
We have examined copies of contracts entered into by several
of these manufacturers and it is our notion that reservation
of title by the manufacturer is for security purposes only.
A situation somewhat similar to this was considered by the
Board of Tax Appeals in the case of Atwell Auto Service
Company vs. The Tax Commission, case No. 8430. In this case
an auto distributor sold new cars to a dealer and the title
to such cars was placed in a financing agency until full
payment was made by the dealer. The Board of Tax Appeals held
that while legal title to the cars was vested in another
until such cars were sold, the dealer had a beneficial
interest therein, had possession and control thereof with
authority to sell the cars, and therefore such cars should be
returned for personal property tax purposes by the dealer.
We would suggest that a copy of the contract agreement
entered into by the dealer with the supplier of the farm
equipment be obtained in those questionable cases in order to
determine if the merchandise was acquired under conditional
sales contract or under a consignment agreement. It may be
said generally that where goods are consigned to another with
the understanding that the consignee shall either sell the
property for the consignor, and remit to him the price, or,
if he does not sell the property, return the same to such
consignor, the transaction is not a sale but a consignment
relationship.
Farm implements under the consignment agreement would then be
returned for taxation as provided under Rule No. 208 wherein
the supplier or manufacturer would be required to list such
property unless he be a non-resident not authorized to engage
in and not engaged in business in Ohio or not otherwise
required to file a personal property tax return in this
state.