Did a District of Columbia exemption certificate exempt California marine-fuel sales to the Argentine Navy?

Plain-English summary

California sales of marine fuel for an Argentine Navy vessel were taxable on the submitted facts. The seller produced a District of Columbia exemption certificate but no U.S. Department of State Tax Exemption Card or other proof satisfying California's diplomatic exemption.

The sales were completed in California. Regulation 1619 extended immunity only to identified foreign consular officers, employees, or family members to the extent stated on a federal card, including any minimum-purchase condition.

Common questions

Did the D.C. exemption certificate control in California?

No.

What evidence did the letter identify for diplomatic immunity?

A U.S. Department of State Tax Exemption Card specifying the extent of exemption.

Were the fuel deliveries California sales?

Yes, according to the invoices reviewed.

Citations and references

• California Revenue and Taxation Code sections 6007 and 6051 — retail-sale definition and sales-tax imposition cited in the letter
• California Revenue and Taxation Code section 6352 — exemption when federal law requires it
• California Sales and Use Tax Regulation 1619(a)(1) — diplomatic and consular tax-exemption requirements cited and quoted in part
• CPA's letter received December 22, 1994 requesting treatment of July 1994 marine-fuel sales for an Argentine Navy vessel — letter quoted in part but not reproduced as a separate record in the official PDF
• District of Columbia Sales and Use Tax exemption certificate and additional transaction documents supplied for review — certificate and documents referenced but not reproduced in the official PDF
• Invoices showing California completion of two July 1994 fuel sales and prior billing and remittance of California tax — facts supplied; complete invoices, contracts, orders, delivery records, payment records, returns, and remittance records not reproduced in the official PDF
• Argentine Embassy naval-attaché representative's exemption claim — claim quoted through the CPA's letter; representative identity, authority, correspondence, and supporting federal materials not reproduced in the official PDF
• U.S. Department of State Tax Exemption Card and applicable treaties or diplomatic agreements — required authority discussed, but no card, card terms, purchaser identification, treaty, agreement, or federal determination was supplied in the official PDF
• Regulation 1619 enclosure and copy notice to the redacted district administrator — enclosure listed but not reproduced beyond the quoted excerpt; district implementation record not supplied in the official PDF
• Official Annotation 250.0005's Argentine Diplomatic Corp. identity and Navy-vessels wording — annotation does not explain its plural vessels versus the official PDF's single described vessel or supply additional transaction records
• Possible later card presentation, exemption substantiation, refund claim, audit, assessment, appeal, customer reimbursement, or other agency action — no follow-up or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/250-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/250-0005.pdf

Original ruling text

250.0005

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, CALIFORNIA 94279-0082)
Telephone No.: (916) 324-3828
Facsimile No.: (916) 323-3387

DEAN ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

February 9, 1995

────────
BURTON W. OLIVER
Executive Director

S--- P. P---, C.P.A.
J--- and S--P.O. Box XXXX, Berth XX
--- ---, CA XXXXX
Re:

Taxable Status of Sales of
Marine Fuel to the Argentine Navy
SR -- XX-XXXXXX

Dear Ms. P---:
This is in response to your letter received by us on December 22, 1994 in which you state the following: “J--- and S--- (“J---”) engages in retail and wholesale sales of marine fuel in California as well as in interstate and foreign commerce. In July of 1994, J--sold fuel to the Argentine Diplomatic Corp. in Washington D.C. for the operation of an Argentine Navy vessel, the A--- S--- C---. The fuel was loaded onto the vessel at Berth #XX, O--- H---, S--- P---, California on July 6, 1994 and July 21, 1994. Consequently, J--- billed the customer California sales tax on those sales, and has since remitted it to the Board. “A representative of the Naval attach' of the Embassy of the Argentine Republic contends that the embassy is exempt from sales tax on the sales because the embassy is exempt from sales and use tax in all states in the United States. The representative sent J--- a copy of a District of Columbia Sales and Use Tax exemption certificate as evidence supporting their claim of exempt status.”

Ms. S--- P---, C.P.A.

-2-

February 9, 1995
250.0005

You have provided us with additional information including documents pertaining to the sales as well as a copy of the District of Columbia exemption certificate that was issued by that district. Section 6051 of the Revenue and Taxation Code imposes the sales tax on retailers for the privilege of selling tangible personal property at retail. The measure of tax is based on gross receipts from the retail sales in the state of tangible personal property. Section 6007, in part, provides that a retail sale means a sale for any purpose other than resale in the regular course of business in the form of tangible personal property. There are exemptions for various types of sales of personal property provided for under the law. Revenue and Taxation Code Section 6352 provides an exemption from sales and use tax when federal law so requires. As relevant here, this is explained in Sales and Use Tax Regulation 1619 which provides in pertinent part: “(a)

Application of Tax.
(1) In General. Neither sales nor use tax applies to the sale or use of tangible personal property sold to foreign consular officers, employees, or members of their families, to the extent that such persons have been identified by the U.S. Department of State as immune from the tax pursuant to treaties or other diplomatic agreements with the United States. Persons identified as immune from taxation pursuant to treaties or other diplomatic agreements with the United States will be issued a Tax Exemption Card by the U.S. Department of State which identifies the bearer as exempt from tax and which specifies the extent of the exemption. Tax applies to sales of tangible personal property to foreign consular officers, employees, or members of their families, who do not hold a tax exemption card issued by the U.S. Department of State . . . . Also, tax applies to sales of tangible personal property to persons holding Tax Exemption Cards where their total purchases in a single transaction do not exceed the minimum level of exemption as specified on the Tax Exemption Card.”

Your sale was to the Argentine Diplomatic Corporation. Apparently there is an exemption provided for such sales of tangible personal property in the District of Columbia as is indicated by the exemption certificate that you provided. The Sales and Use Tax Laws vary from State to State. You have not provided information showing that your sales qualified for the exemption discussed above or for any other exemption in California. For example you make no mention of the issuance of a Tax Exemption Card issued by the United States Department of State nor its presentation to you for the exemption claimed, thus I assume none was provided. The sales of the fuel in question were sales which were completed in State of California as shown by the invoices which were provided. The purchaser did not comply with the prerequisites required under the law to qualify for the exemption claimed, therefore, those sales

Ms. S--- P---, C.P.A.

are taxable.

-3-

February 9, 1995
250.0005

Ms. S--- P---, C.P.A.

-4-

February 9, 1995
250.0005

I am enclosing a copy of Sales and Use Tax Regulation 1619 for your information. If you have any further questions in regard to this matter, please advise. Your Very Truly,

Anthony I. Picciano
Staff Counsel
AIP:es
Enclosure: Reg. 1619
cc:

--- - District Administrator (--)