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vendor. A vendor could choose, however, to make an immediate
payment of show money to a member store, either in currency or by
check. If the vendor chose currency, the currency either had
come from petitioner (i.e., petitioner-delivered currency) or was
provided by the vendor itself (vendor-provided currency). If
payment was of petitioner-delivered currency, respondent’s
argument is that the vendor was not using its own money to pay
show money: The vendor was using petitioner’s money to pay show
money. As respondent sees it, simultaneously with the vendor’s
making a payment of petitioner-delivered currency to a member
store, the vendor rebated an equal amount to petitioner, which
petitioner returned to the vendor under an earlier direction that
the vendor pay the amount to the member store on petitioner’s
behalf.
Respondent justifies such indirection on the ground that
petitioner asserted sufficient control over the circumstances
surrounding the vendors’ receipts of petitioner-delivered
currency that the vendors should be viewed as nothing more than
petitioner’s agents engaged to pay to the member stores rebates
from moneys (rebates) first received by petitioner. Respondent
does not pin down the nature of that control, however, and the
fact that respondent does not similarly treat the vendors as
petitioner’s agents in the case of vendor-provided currency or
checks (hereafter, without distinction, vendor-provided currency)
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Last modified: November 10, 2007