Information Release

ST 1995-04  - CORE CHARGES - Updated November, 2004
Supersedes Information Release Dated March, 1995

The purpose of this information release is to restate the Department’s long held position concerning core charges.

Section 5739.01(H)(1)(a) of the Ohio Revised Code states, in part:

“Price,”. . . means the total amount of consideration, including cash, credit, property, and services, for which tangible personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction . . .”

Basically, a “core charge” is part of the selling price charged by the retailer to encourage the customer to “trade-in” a similar used or broken item. The core charge may or may not be separately stated on the bill of sale or invoice. The amount of the core charge establishes a value for the item being traded in. The law does not provide for a reduction in the “price” for the value of an item traded in, except in these instances when: 1) a motor vehicle is traded in on the purchase of a new motor vehicle, 2) a watercraft is traded in on the purchase of a new or used watercraft, or 3) an outboard motor is traded in on the purchase of a new or used outboard motor.

The most common example of a “core charge” situation is in the after market auto parts industry. An auto parts retailer will sell a starter for $59.95, plus a $10.00 core charge. If the purchaser of the starter returns to the retailer with a used or broken starter, the retailer will pay the purchaser $10.00. In effect, the purchaser has given the retailer $59.95 in cash (or credit) and something valued at $10.00 to complete the retail purchase of the starter. Therefore, the “price” for calculating sales tax is $69.95 and the retailer cannot refund the sales tax on the $10.00 core charge.

If you have any questions regarding this matter, please contact one of our Taxpayer Services Centers at 1-888-405-4039, or e-mail us through our website at tax.ohio.gov.

OHIO RELAY SERVICES FOR THE
HEARING OR SPEECH IMPAIRED
Telephone: 1-800-750-0750