How did California tax sales by a retailer who moved away but returned in a motorhome to sell to California customers?

Plain-English summary

A California retailer planned to sell a home, travel among western states in a motorhome, and continue serving California customers. The retailer expected to keep a California post-office box and bank account temporarily and to return to the state to sell.

Staff said sales tax applied to California sales made while operating out of, or in connection with, a retained California branch, office, outlet, or other business location.

If no California business location remained, use tax rather than sales tax applied to property sold for California use. Even then, re-entering California to sell, take orders, or otherwise generate business made the retailer responsible for collecting that use tax under section 6203(b).

Common questions

Did moving the residence outside California end all collection duties?

No.

When did the opinion apply sales tax?

When an in-state sale operated out of or had a connection with a California business location.

What if no California business location remained?

Use tax applied, and the retailer still had to collect it when returning to California to generate business.

Did the letter decide whether a post-office box or bank account was a business location?

No. It said the facts were unclear.

Citations and references

• California Revenue and Taxation Code section 6203(b) — in-state selling and order-taking activity applied
• California Code of Regulations, title 18, section 1620(a)(2)(A) and (b)(1) — local participation and interstate-sale treatment discussed
• California Revenue and Taxation Code sections 6051, 6201-6204, and 6401 — sales and use tax framework discussed

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/175-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/175-0148-400.pdf

Original ruling text

175.0148.400

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION - MIC: 82
450 N STREET, SACRAMENTO, CALIFORNIA
(P. O. BOX 942879, SACRAMENTO, CA 94279-0082)
TELEPHONE: (916) 322-2976
FAX: (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles

May 2, 1996

KATHLEEN CONNELL
Controller, Sacramento

E. L. SORENSEN, JR.
Executive Director

REDACTED TEXT

Re:

REDACTED TEXT

Dear REDACTED TEXT:
This is in response to your letter dated March 11, 1996 regarding the application of tax to your sales to California customers. You state: “I currently hold California resale permit number REDACTED TEXT and operate my business, REDACTED TEXT, from REDACTED TEXT, CA. “I have sold my home and plan to take my business ‘on the road’ working from a motorhome. I plan to spend at least a month at a time in a number of the western states. I am planning to keep my post office box and bank account here in REDACTED TEXT until I finally purchase another home somewhere in the Northwest. I plan to purchase a home in the next 12 months. “My question is this: What do I do about collecting California sales taxes? I do have and plan to keep my current customers in California. At present, I do not have any customers in Placer County (where I now live and where I plan to keep my P.O. Box and bank account).” DISCUSSION Retail sales of tangible personal property in California are subject to sales tax, measured by gross receipts, unless specifically exempt from taxation by statute. (Rev. & Tax. Code § 6051.) A retailer may collect reimbursement from its customers for its sales tax liability if its contract of sale so provides. (Civ. Code § 1656.1.) When sales tax does not apply, such as when sales take place outside of California, the use tax, measured by the sales price of the property sold, applies to the use of property purchased from a retailer for storage, use, or other consumption in California, unless the use is specifically exempt from taxation by statute.

REDACTED TEXT

-2-

May 2, 1996
175.0148.400

(Rev. & Tax. Code §§ 6201, 6401, Reg. 1620.) Although the purchaser is liable for the use tax, a retailer engaged in business in this state is required to collect the use tax from the purchaser and to pay that tax to this state. (See Rev. & Tax. Code §§ 6202, 6203, 6204.) It appears from your letter that after you sell your home and move out of California, you plan to sell tangible personal property to California customers from inside California when you re-enter this state in your motorhome. It is not clear whether you will maintain a business location in California after you sell your home and move out of state. As long as you maintain a business location in this state, when you make sales inside of California while operating out of or having a connection with that place of business, you owe sales tax on those sales. (Reg. 1620(a)(2)(A).) If you do not maintain a California branch, office, outlet, or other place of business for REDACTED TEXT, the use tax, rather than the sales tax, will apply. (Reg. 1620(b)(1).) Our understanding is that even after you sell your home and move out-of-state, you will continue to enter California for the purpose of selling, taking orders, or otherwise generating business for your company. This means that even if your company does not have a California business location, when you sell tangible personal property to California purchasers for use in this state, you must collect the use tax from those purchasers and pay that tax to this state. (Rev. & Tax. Code § 6203(b).) If you have further questions, please feel free to write again. Sincerely,

Kelly W. Ching
Staff Counsel
KWC:cl