Agency Relationships; Direct Purchases

19.1. Effective August 31, 1990, persons who perform contracting or who are acting in an agency capacity are prohibited from asserting any exemption to which the purchaser of such contracting services or the principal is entitled. Any statutory exemption to which a taxpayer is entitled shall be invalid unless the tangible personal property or service is actually purchased directly by the taxpayer and is directly invoiced to and paid by the taxpayer. Any contractual arrangement or understanding between an agent, employee, or other representative and a principal or employer shall not be recognized by the Tax Commissioner. Each vendor shall charge and collect consumers sales and service tax on the total selling price of tangible personal property or service even though the agent, employee, or other representative:

19.1.1. Is on official business on behalf of the principal or employer; or

19.1.2. Is on a per diem from the principal or employer; or

19.1.3. Is on an expense account or will otherwise be reimbursed by the principal or employer; or

19.1.4. Has or will receive monies, credits or other assets from the principal or employer to pay for the transaction.

19.2. Section 19.1 does not apply to purchases made by an employee for his or her employer, a partner for his or her partnership, or a duly authorized officer of a corporation, or unincorporated organization, for his or her corporation or unincorporated organization, as long as the purchase is invoiced to and paid by such employer, partnership, corporation or unincorporated organization.

19.3. Section 19.1 does not apply to purchases of tangible personal property or taxable services made in fulfillment of a purchasing agent or procurement agent contract executed and legally binding on the parties prior to September 15, 1990, as long as the purchases are made before September 1, 1991. This transition rule does not apply if the primary purpose of the purchasing agent or procurement agent contract was to avoid payment of consumer sales and use taxes.

19.3.1. Purchases of tangible personal property or taxable services made prior to September 1, 1991, in fulfillment of a purchasing agent or procurement agent contract executed and legally binding on the parties prior to September 15, 1990, are taxable unless the bill, invoice, contract, or other evidence of the transaction is made out in the name of the principal which qualifies for an exemption under the consumer sales and use tax laws and the payment is made on that principal's check, warrant or voucher, or on a check drawn on a trust account set up by the agent for the principal. This rule applies even though the same purchase would have been exempt from consumers sales and use taxes had the principal or employer directly purchased the tangible personal property or service in accordance with Section 9 of these regulations.

§§110-15-20 through 110-15-27. Reserved for Future Use.