Rule 18.
(1) As
used in this rule, "containers" means the articles and devices in which
tangible personal property is placed for shipment and delivery, such as
wrapping materials, bags, cans, twines, gummed tapes, barrels, boxes, tote
boxes, pallets, racks, bottles, drums, carboys, cartons, sacks, and materials
from which the containers are manufactured.
(2) Sales of containers to persons engaged in
rendering a service are taxable.
(3) Sales of containers that will be resold
with the product are eligible for a resale exemption. If a separate charge is
made for the sale of a container to a
person, other than for resale, it is
taxable. Sales of containers that are not resold with the property it contains
are taxable.
Example 1: ABC manufactures golf balls. ABC sells its golf
balls for resale to retailers. When a retailer places an order, ABC packages
its golf balls by the dozen into boxes that are intended to be sold with the
golf balls. When ABC receives an order from a retailer it places multiple boxes
of golf balls into a larger box for shipment. The box that is sold with the
golf balls is eligible for the resale exemption.
However, the larger box used to ship multiple boxes of golf
balls is taxable because it is not resold. ABC shall pay sales tax when it
purchases the larger box or remit use tax on the purchase price of the
box.
Example 2: Same facts as Example 1 except that ABC packages
a gross of golf balls, a dozen boxes of a dozen golf balls, for shipment to
retailers with the packaging into the larger box occurring before the packages
of golf balls first come to rest in finished goods inventory. The larger box,
and associated packing materials such as popcorn, styrofoam, and peanuts, are
exempt as it was used in the packaging before the golf ball boxes came to rest
in finished goods inventory.
(4) Sales of containers to a person, such as
a manufacturer, wholesaler, jobber, or retailer, who uses the containers to
ship or deliver goods, and retains the ownership or legal right of possession
of the containers, are taxable.
(5)
Sales or purchases, for a single use only, of bracings, blocking, skidding,
shoring, and other materials, commonly known as dunnage are taxable when used
in the shipment of a product to a customer.
(6) Deposits on a returnable container for a
beverage, or the deposit on a carton or case which is used for returnable
beverage containers, are not taxable when sold in conjunction with a sale of a
beverage.
