For example, a customer acquires a maintenance contract that provides for repair and service computer equipment, as well as technology upgrade services, which allow for a regular exchange of computers. The contract separately lists the cost of work for repairing and serviceing computer equipment and the price of replacement computers used in the technology update program. The amount to be paid by the customer who is not covered by the maintenance contract is subject to the “B-O” retailing tax and the turnover tax must be collected. A maintenance contract (contract), sometimes called a service contract (contract), is a contract that requires a specific execution of the repair, cleaning, modification or improvement of physical personal property, on a regular or irregular basis, in order to ensure the always satisfactory operation of the product. It seems you can barely buy a computer, phone or other electronic handheld or even a cheap tool without being offered an extended warranty. Retailers offering such service agreements should be assured that they properly comply with the tax laws of different cities of residence in order to avoid costly audits. It is easier to pre-tax an item that pays taxes, interest and penalties during the review, with little chance of recovering tax from your customers. Many retailers sell warranties or maintenance contracts with products such as cars, computers and appliances. This publication explains how the revenue and usage tax applies when you sell a warranty or maintenance contract (sometimes called a “service plan”) or if you make a repair that falls under such an agreement. In Illinois, the fiscal viability of a maintenance contract depends in part on whether contract costs are included in the sale price of the personal material assets it covers. The tax obligation of the maintenance contract in turn affects the question of whether the service provider owes the user tax on food services or the parts provided in accordance with the terms of the contract: if you are a buyer, note that the sellers often correctly miss the taxed person. It is then up to you to assess the tax yourself and, if necessary, transfer it. The individual has the same responsibility as the companies.

In the case of a unbundled maintenance contract, only the sale prices of the separately listed taxable items are subject to the Minnesota Sales and Use Tax. During the tax reporting period, the customer brings the vehicle for the planned maintenance, the dealer must declare the $60 under the tax bill “GrosS-B-O”. The amounts received in the form of commission or consideration for the sale of a maintenance contract for a third party are subject to the taxable tax under the Tax Bill Service and other activities. Insurance policies are not taxed, but distinguishing between an extended warranty or maintenance contract and an insurance product can be very difficult for retailers and accountants. An important point that we need to focus on is the transfer of the risk of loss. Another problem is the deficiencies or quality problems in relation to accidents. These lines are now often scrambled with different offers. Example: An office supply company sells a photocopier to a customer. The customer also acquires an optional maintenance contract from the company for an unassigned price. The maintenance contract allows the customer to benefit from free service and sharing in the event of a photocopier failure.

The contract also provides for quarterly inspections; Replacing the drum after 100,000 copies; and toner, which must be made available as needed. The price of the personal material property used in the contract is more than 10% of the total group price.