Must a California finance company hold a seller's permit when it repossesses property and resells it?

Plain-English summary

A finance company that repossesses tangible personal property and resells it must hold a California seller's permit when its sales are sufficient in number, scope, and character to require one.

The original 1950 letter explained that the San Diego district required permits where finance companies made their own repossessions and sold the recovered property. The Board's counsel agreed that the requirement was proper in those cases.

A 1987 amendment simplified the annotation to the direct rule: "Finance companies which make their own repossessions and resell the repossessed property are required to hold seller's permits." It also removed obsolete references to banks because the amendment said banks were by then subject to seller-permit and sales-tax rules under Regulation 1567 and Annotation 135.0130.

What this means for you

Finance companies and secured lenders

Repossession alone is not the activity highlighted here; the permit consequence comes from reselling the repossessed property. If your company regularly disposes of recovered vehicles, equipment, or other tangible property, review California registration and collection obligations.

Auto and equipment lenders

The source arose from automobile-financing transactions, but the 1987 amended language is framed broadly around repossessed tangible personal property.

Accountants and tax professionals

The original letter used the traditional "number, scope, and character" test. The amended annotation states the permit requirement directly. Because this is historical guidance, confirm how current statutes and regulations apply to the client's actual resale program.

Common questions

Q: Does every finance company need a seller's permit?
A: This source addresses finance companies that make their own repossessions and resell the property. It does not say that financing activity by itself requires a permit.

Q: Why was the annotation amended in 1987?
A: The amendment removed references to banks that had become obsolete and replaced the older discussion with a concise rule for finance companies reselling repossessed property.

Q: Does the source set a numerical sales threshold?
A: No. The original letter refers to sales of sufficient number, scope, and character but gives no specific count.

Q: Is this current binding guidance?
A: It is published historical support for an annotation, not a taxpayer-specific ruling that guarantees a result today. Check current law and registration guidance.

Citations and references

• Cal. Code Regs. tit. 18, § 1567 (cited by the 1987 amendment regarding banks)
• Sales and Use Tax Annotation 135.0130 (also cited by the amendment)
• San Diego district office report on finance-company seller's permits — described but not dated or reproduced in the official PDF
• September 16, 1987 annotation-amendment memorandum — included in the official PDF; author identified only by initials DJH:rar

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 200.0080
• Original supporting opinion: 200.0080 PDF

Original ruling text

200.0080

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
May 3, 1950
Amended 9/16/87

Dear Mr. REDACTED TEXT:
This will advise you that we have now received a report from our San Diego district office with respect to its requirement that finance companies obtain a seller's permit in connection with transactions involving financing of automobiles. Our San Diego office indicates that they have required finance companies to obtain seller's permits only in those instances in which the finance companies make sales of tangible personal property of sufficient number, scope, and character to require such a permit. It appears that certain finance companies in that area make their own repossessions and resell the repossessed property. In these cases it seems that our district office has properly required the finance companies to obtain seller's permits. If you have any question concerning the propriety of requiring a particular company to obtain a seller's permit, we shall be pleased to go into the matter further with you. Very truly yours,

R. G. HAMLIN
Associate Tax Counsel
RGH:HB
9/16/87
This annotation will be amended to remove the references to banks, which are obsolete, since banks are now required to hold seller's permits and pay sales tax as explained in Regulation 1567 and Annotation 135.0130. The amended annotation will read as follows: "Finance companies which make their own repossessions and resell the repossessed property are required to hold seller's permits." DJH:rar