Did a California employee owe use tax when her employer awarded her the automobile she had previously leased?

Plain-English summary

A California employee had leased a car for three years, then won that same car in an employer-sponsored contest. The sponsor apparently acquired it from the leasing company for the award.

The letter placed use tax on the leasing-company transfer to the contest sponsor under the cited statute. If the sponsor paid the tax on the prize property, the contest winner had no separate tax liability.

The winner still needed a Board exemption form for vehicle registration, and the agency requested the sponsor's name and address before issuing it.

Citations and references

• California Revenue and Taxation Code § 6292
• Winner's undated request postmarked Feb. 3, 1969 — facts and question recited; letter, envelope, attachments, and vehicle records not reproduced in the official PDF
• Three-year Colorado-company lease, employer-sponsored contest, award of the same car, presumed sponsor acquisition, sponsor tax payment condition, vehicle registration, and Form BT-111 — facts supplied or assumed and procedure identified; lease, title, registration, contest rules and winner record, sponsor acquisition agreement and invoice, tax payment, sponsor identity and address, exemption application, form, and DMV action not reproduced in the official PDF
• Official Annotation 280.1150's California employee, leased car, contest award, no-winner-tax, and sponsor-use-tax summary — annotation omits the section 6292 transfer path, sponsor-payment condition, missing sponsor information, and Form BT-111 procedure and supplies no additional transaction record
• Possible later sponsor identification, tax payment, form issuance, registration, audit, assessment, 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 280.1150
• Original supporting opinion: 280.1150 PDF

Original ruling text

280.1150

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 24, 1969
Ms. A--- K--- O--XXXXX --- Road, #XXX
---, CA XXXXX
SR --- XX XXXXXX
J--- L---, Inc.
Dear Ms. O---:
This is in response to your undated letter postmarked February 3, 1969, with reference to use tax applicable to the transfer of a car which you received as a contest winner. We understand that the car was leased by you for three years prior to the contest from the J--- L--- Corporation of ---, Colorado; that your employer sponsored the contest in which you were the winner of the car previously leased by you. The sponsor of the contest presumably obtained the car from the above-leasing company for the purpose of awarding it to the winner. Under the above facts, use tax is due pursuant to section 6292 of the Sales and Use Tax Law, on the transfer from the leasing company to the contest sponsor. We have ruled that where the promoter has paid the tax on the property awarded to the contest winner, there is no liability upon the contest winner for the tax. Accordingly, it appears that the transfer to you may be exempt. In order for you to claim the exemption, upon registration of the car, it is necessary that we issue an exemption Form BT-111 to you. However, before we can do so, we must have the name and address of the contest sponsor. Upon receipt of this information, we will initiate the appropriate exemption form for you. Very truly yours,

T. P. Putnam
Tax Counsel
BY_____
Joseph Manarolla
JM:smb