Section R15-5-137. Warranty or Service Provisions and Tangible Personal Property Used in Conjunction with Warranty or Ser- vice Provisions

A.      For purposes of this rule, the following definitions apply:

1.        “Covered” means included in the warranty or service pro- vision.

2.        “Warranty or service provision” means a manufacturer’s or vendor’s warranty that is sold automatically with tan- gible personal property and, for no extra charge, applies to any tangible personal property used in the servicing of the provision.

B.       An exclusion from gross receipts is not allowed for a warranty or service provision on the sale of tangible personal property if the property cannot be sold without the acceptance of the war- ranty or service provision.

C.      A warranty or service provision is not considered a warranty or service contract under A.R.S. § 42-5061(A).

D.      Tangible personal property sold in conjunction with the servic- ing of a warranty or service provision, but not covered by the provision, is a sale of tangible personal property that is subject to tax under the retail classification unless statutorily exempt.

E.       Tangible personal property that is covered under a warranty or service provision and used in the servicing of the provision is not subject to use tax as the transaction privilege tax was paid when the tangible personal property was acquired.

Historical Note

Adopted effective August 9, 1993 (Supp. 93-3).

Amended by final rulemaking at 13 A.A.R. 679, effective April 7, 2007 (Supp. 07-1).