Were international organizations treated as foreign governments for California sales and use tax?

Plain-English summary

International organizations were separate from their constituent member governments and did not generally receive the foreign-government exemption for their sales.

The United Nations was uniquely immune by treaty from direct sales tax on its sales. That immunity did not shelter the purchaser from California use tax, which was imposed directly on the purchaser.

The same entity distinction applied to organizations made up of U.S. states; the letter identified the Multistate Tax Commission as an organization whose sales and purchases were taxable.

Common questions

Were international organizations foreign governments?

No.

Did United Nations immunity eliminate purchaser use tax?

No.

Is this source duplicated elsewhere?

Yes. Annotation 250.0220 publishes a separately formatted copy of the same substantive letter.

Citations and references

• Redacted requester's March 5, 1990 letter asking about books and documents purchased from the United Nations, Organization of American States, and Organization for Economic Cooperation and Development — letter referenced and position characterized but not reproduced in the official PDF
• Unidentified United States treaties with international organizations and unidentified treaty expressly immunizing the United Nations from direct taxation — treaties referenced without name, article, citation, text, date, party analysis, or URL
• Generic California Sales and Use Tax Law governing seller sales tax and purchaser use tax — discussed without statute, regulation, decision, annotation, or other specific authority in the official PDF
• Books, documents, purchase prices, payments, seller tax charges, and sales and use tax returns underlying the request — categories and reporting direction supplied; complete orders, invoices, receipts, publications, tax charges, returns, and reporting records not reproduced in the official PDF
• United Nations, Organization of American States, Organization for Economic Cooperation and Development, Multistate Tax Commission, sister-state, and California transactions used in the analysis — organizations and outcomes discussed without constitutive documents, membership records, transaction files, or specific exemption authorities in the official PDF
• Official Annotation 250.0150's current international-organization and United Nations summary, including its added “or exclusions” wording — annotation does not identify an exclusion authority or supply additional treaty, transaction, or reporting records
• Official Annotation 250.0220's separately formatted copy of the same substantive June 8, 1990 letter — PDF also differs in masthead, wrapping, page break, and footer placement but supplies no additional substantive record
• Possible later use-tax reporting, payment, audit, assessment, refund claim, appeal, treaty interpretation, 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/250-0150.pdf
• Separately published duplicate supporting opinion for Annotation 250.0220: https://cdtfa.ca.gov/lawguides/annotations/250-0220.pdf

Original ruling text

250.0150

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-3723

June 8, 1990
REDACTED TEXT
Dear Ms. REDACTED TEXT:
This is in response to your letter of March 5, 1990. We apologize for the excessive delay in our response. You have inquired as to the taxability of purchases of books and documents from international organizations such as the United Nations, the Organization of American States, and the Organization for Economic Cooperation and Development. It is your understanding that these purchases are exempt from sales and use tax because these organizations are government entities. Your basis for considering these organizations to be governmental entities is that the United States government has treaties with them, and treaties can only be concluded between governments. While neither sales nor use tax applies to books and documents purchased from foreign governments, we do not regard international organizations as foreign governments, but as entities separate and apart from the constituent member states. Generally, there are no exemptions in the Sales and Use Tax Law for sales made by international organizations. The California sales tax applies to sales of tangible personal property. The legal incidence of the tax is upon the seller, although customarily the tax is passed on to the purchaser as a separately itemized amount. The California use tax is imposed upon the purchaser. The use tax is due from purchasers in situations where the sales tax does not apply, unless there is also a use tax exemption. Transactions involving the United Nations illustrate the dual taxing system. The United Nations is unique in that it is not required to pay sales tax on its sale transactions. This is because the United Nations is expressly immune from direct taxation, by treaty. However, the treaty immunity of the United Nations does not shelter purchasers from the California use tax, because the use tax is imposed directly on the purchaser. Thus, purchases made from the United Nations are subject to use tax. On your sales and use tax return you should report use tax measured by the purchase price of all books and documents purchased from international organizations, if you have not paid California tax directly to the organizations.

Ms. REDACTED TEXT

-2-

June 8, 1990
250.0150

We note the same interpretation applies to states of the United States (other than California). Neither sales tax nor use tax applies to sales by, or purchases from, sister states. Tax does apply to sales made by, or purchases made from, organizations whose members are states of the United States. Thus, tax applies, for example, to sales made by the Multistate Tax Commission. Sales made by, and purchases made from, the State of California are taxable. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel

GJJ:sr