Should a seller's credit for forms not shipped also refund the related sales-tax charge?

Plain-English summary

A seller failed to ship the full quantity of forms its customer ordered and asked how sales tax applied to the resulting credit.

The Board treated the short shipment as correction of a mistake. Tax applied only to the corrected sale amount, so the seller could give the customer a corresponding credit for the sales tax on the unshipped amount.

Citations and references

• The official letter cites no statute or regulation by number.
• Requester's Oct. 9 letter asking about sales tax on a customer credit caused by a short shipment of ordered forms — year, request, attachments, requester identity, and account details beyond redaction not reproduced in the official PDF
• Customer order, short shipment of forms, correction amount, and customer credit for the related sales tax — facts supplied; customer identity, order, forms, quantities, shipment record, invoice, prices, correction calculation, credit memorandum, return, and tax computation not reproduced in the official PDF
• Official Annotation 295.0180's short-order, sales-tax credit, mistake-correction, and corrected-tax-amount summary, dated Dec. 15, 1952 — annotation omits the Oct. 9 request and account provenance, absence of numbered legal authority, underlying transaction records, and later outcome and supplies no additional transaction record
• Possible later issuance or use of the credit, corrected invoice or return filing, customer receipt or dispute, audit, assessment, payment, refund claim, appeal, or other agency action — not 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/295-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/295-0180.pdf

Original ruling text

295.0180

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

December 15, 1952

Your letter of October 9
Account No. X---Attention:
Gentlemen:
The question which you present involves the application of sales tax to the amount of a credit issued to a customer due to the fact that you did not ship the full quantity of forms which he ordered. It is our opinion that this situation should be regarded merely as the correction of a mistake with the tax applying to the corrected amount. It would be correct, therefore, to allow the customer credit for the sales tax on the amount of the adjustment.

Yours very truly,

W. W. Mangels
Assistant Counsel

cc:

Oakland - Auditing