Did a contest winner owe tax on a car after the promoter paid sales tax when buying it?

Plain-English summary

A contest promoter bought an automobile and reimbursed the dealer for the sales tax on that transaction. It used the car to promote a contest and awarded it to the winner several months later.

The letter found no second taxable sale because the winner acquired the car by chance or skill. It also found no use-tax liability because she received the car as a gift or premium rather than through a purchase.

The agency said the winner should use the then-current Form BT-111 if the tax had not been paid or file a refund claim if it had. Those procedural directions and the listed office details are historical.

Citations and references

• The source letter cites no statute or regulation by number.
• July 10, 1967 request — question recited; request itself not reproduced in the official PDF
• Form BT-111 and a claim for refund — identified as alternative procedures; form edition, claim date, amount, identifiers, and copies not supplied
• Promoter's April automobile purchase, dealer sales-tax reimbursement, contest use as the primary premium, and July award to the winner — facts recited; purchase agreement, invoice, tax receipt, title, registration, contest rules, entries, winner determination, and transfer record not reproduced in the official PDF
• Official Annotation 280.0300's prior taxed transfer, chance-or-skill award, nontaxable sale, and gift-or-premium use-tax summary — annotation omits Form BT-111 and refund procedure and supplies no additional transaction or implementation record
• Possible later Form BT-111 filing, refund claim, agency action, payment, registration clearance, audit, appeal, or other outcome — not supplied in the official PDF

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 280.0300
• Original supporting opinion: 280.0300 PDF

Original ruling text

280.0300

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 1, 1967

--- --- ----- --- ----- --- --Gentlemen:
In your letter of July 10, 1967, you ask whether tax was properly assessed on the transfer of an automobile to the winner of a contest when there had been sales tax paid on the prior transfer of the automobile to your organization. As we understand the facts, the “C” purchased the automobile and reimbursed the automobile dealer for the sales tax levied on this transaction. A contest was then held during which time “C” used the automobile as a primary premium to engender interest in the contest. Upon the conclusion of the contest, the automobile was awarded to the winner. The original purchase by “C” took place in April, and the transfer to the contest winner took place in July. Under this fact situation, the second transfer to the contest winner is not a taxable sale since she acquired it by chance or skill. There is no use tax liability because she received the car as a gift or premium and not through a purchase. Therefore, if “O” has not yet paid the tax, she should file form BT-111. If she has paid the tax, she should file a claim for refund. Either of these forms can be obtained form 983 Sonoma Avenue, P.O. Box 730, Santa Rosa 95402, phone 542-2377. If you have further questions, please feel free to write. Very truly yours,

T. P. Putnam
Tax Counsel
By

A. Wells Petersen

AWP:smk

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