SENATE BILL NO. 38
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO WHOLESALERS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend §2901, Title 30 of the Delaware Code, by adding to said section a new subparagraph (2)b.(vi) to read as follows:
"(vi) Delivery to the purchaser where the purchaser's vehicle or vessel is not headquartered or dispatched from within Delaware, the property is immediately taken outside of Delaware and the purchaser provides the wholesaler with an Exemption Certificate documenting the sale in accordance with Regulations adopted or to be adopted by the Director of Revenue."
Section 2. Amend §2901, Title 30 of the Delaware Code, by adding to said section a new subsection (9) to read as follows:
"(9) 'Exemption Certificates', for purposes of this chapter, are documents created by regulations adopted or to be adopted by the Director of Revenue which are provided to a wholesaler by a purchaser to document a wholesale sale where the property is immediately taken outside of Delaware and the sale thus does not result in taxable gross receipts."
Section 3. Amend §2902 (c), Title 30 of the Delaware Code, by adding to said subsection a new paragraph to (6) to read as follows:
"(6) The Director of Revenue is authorized to issue regulations providing for Exemption Certificates to be given by purchasers to wholesalers to document wholesale sales which, pursuant to section 2901(2)b.(vi) of this title, do not result in taxable gross receipts. A wholesaler is entitled to rely upon an Exemption Certificate valid on its face and in compliance with the Regulations for purposes of computing the tax due under this section and shall not be liable for any tax attributable to sales covered by Exemption Certificates that are invalid. Any person providing an Exemption Certificate that is invalid shall in addition to any prosecution under Subchapter V of Chapter 5 of this title, be liable for the tax due (calculated without reference to the monthly exclusion in subsection (c)(1) of this Section), plus interest and a penalty under section 535(a) of this title equal to 75% of the underpayment of tax attributable to sales covered by the invalid Exemption Certificates."
Section 4. Amend §2909, Title 30, Delaware Code, by adding thereto a new subsection (k) to read as follows:
"(k) This Chapter shall not apply to the exchange between or among wholesalers of fungible goods when the goods received by such wholesaler are received by it for the purpose of resale. For purposes of this subsection the term 'fungible' shall refer to goods of which any unit is, by nature or usage of trade, the equivalent of any other like unit. This provision shall not be construed so as to exclude from tax under this chapter the sale, whether at retail or wholesale, of goods received for resale as a result of the exchange. The exemption provided in this section is not applicable to a sale occurring upon the delivery by one exchange partner directly to the customer of the other exchange partner and such delivery shall be treated as made to such customer directly by the other exchange partner and subject to tax, even though such other exchange partner may never have obtained physical possession of such fungible good."
Section 5. The exemption provided by Section 4 of this Act shall be effective for exchanges occurring after December 31, 1996.
Approved May 22, 1997