Manufactured Housing Practice Test

If a dealer contracts a third party for installation on a non-permanent foundation, who is responsible for tax collection?

1. The third party shall collect and pay the tax

2. The dealer shall be liable for collection of tax on the contract amount

3. The buyer will collect tax from the dealer

4. None of the above

The correct answer is: The dealer shall be liable for collection of tax on the contract amount

In this scenario, the dealer's responsibility for tax collection stems from their role in the sales process. When a dealer engages a third party for the installation of a manufactured home, the dealer remains liable for collecting any applicable sales tax on the total contract amount. This involves ensuring that the tax is calculated based on the entire value of the sale, which often includes not only the cost of the home but also installation charges if they are bundled together under the sales contract. The rationale behind holding the dealer accountable for tax collection relates to the nature of retail transactions, where the seller (in this case, the dealer) is typically responsible for remitting sales taxes to the state or relevant tax authority. This practice ensures that the sales tax is assessed at the point of sale and simplifies compliance by placing the onus on the dealer rather than the consumer or the third-party installer. Understanding this aspect of tax collection helps clarify the dealer's obligations in the context of manufactured housing sales and installation.