Tax Type
Property Tax
Description
Merchants' Capital Tax;Automobile and Mobile Home Dealers
Topic
Property Subject to Tax
Date Issued
05-29-1973
Automobiles and mobile homes in the possession of a dealer on January 1 are subject to the local tax on merchants' capital, as part of inventory, if the dealer owns the property, rather than holding it on consignment for the manufacturer. The question as to whether a particular transaction between manufacturer and dealer is a sale or aconsignment is determined by the intention of the parties. Indicative circumstances would include facts as to which party has the power to set the dealer's selling price, the existence of any right of the manufacturer to demand the return of unsold merchandise, and whether the dealer's liability to the manufacturer arises before he sells the property to a customer. In addition, if the dealer includes the property in inventory for income tax purposes, he must include it for the capital tax. Retention of title by a bank which finances the dealer's inventory does not affect his tax liability; he is the owner for purposes of taxation.
Attorney General's Opinion