Who was the consumer when a distributor delivered prizes for a manufacturer's contest and received reimbursement?

Plain-English summary

A manufacturer conducted a contest and awarded its merchandise as prizes. Its Northern California distributor delivered merchandise to winners, and the manufacturer reimbursed the distributor.

Because the manufacturer conducted the contest and awarded the prizes, the letter treated the manufacturer as consumer of the prize merchandise under historical Ruling 72.

The distributor therefore made a taxable retail sale to the manufacturer. The tax measure was the amount the manufacturer paid as reimbursement.

Citations and references

• Historical California Sales and Use Tax Ruling 72 — identified as covering the problem; enclosed copy not reproduced in the official PDF
• Distributor controller's Nov. 24, 1954 inquiry — question recited; letter and any attachments not reproduced in the official PDF
• Manufacturer contest, Northern California prize deliveries, distributor status, and manufacturer reimbursements — facts recited; contest rules, winner records, manufacturer-distributor agreement, orders, invoices, delivery confirmations, reimbursement amounts, and payment records not reproduced in the official PDF
• Official Annotation 280.0320's manufacturer-consumer, distributor-retail-sale, and reimbursement-measure summary — annotation supplies no additional Ruling 72, contest, transaction, tax, or implementation record
• Possible later return filing, audit, assessment, payment, refund claim, appeal, or other agency action — not supplied in the official PDF

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 280.0320
• Original supporting opinion: 280.0320 PDF

Original ruling text

280.0320

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 10, 1955

F--- E--- Co.
--- --- X, California
Attention:

Mr. W--- M. C--Controller

Re:

Your letter of November 24,
1954
SY -- XX XXXXXX

Gentlemen:
You inquire concerning the application of the tax to merchandise which you deliver to certain contest winners in Northern California. The contest was held by the manufacturer of the merchandise which you delivered. You are the Northern California distributor of this merchandise and the manufacturer reimbursed you for this merchandise. This problem is covered by Ruling 72, copy enclosed. Since the manufacturer is the person who conducts the contest and who awards the prizes, the manufacturer is the consumer of the prize merchandise. It is our opinion that you have made a sale of this merchandise to the manufacturer. Since the manufacturer is the consumer of this merchandise, your sale is at retail and is subject to the tax. The measure of the tax is the amount for which you were reimbursed by the manufacturer. Very truly yours,

Bill Holden
Assistant Counsel

BH:tj
cc:

San Francisco-Auditing