Was the new federal 10% retail excise tax on specified luxury items included in California taxable gross receipts?

Plain-English summary

A 1990 Board memorandum considered a new federal 10% retail excise tax scheduled for January 1, 1991 on the first retail sale of specified luxury vehicles, boats, aircraft, jewelry, and furs above stated price thresholds.

The memorandum concluded that the federal retail tax was excluded from California gross receipts under Revenue and Taxation Code section 6012(c)(4)(A). The exclusion applied both to title-transfer sales and to lease transactions treated as a sale and purchase under sections 6006 and 6010.

This is a historical opinion about the federal law as it existed in 1990, not a statement of current federal luxury-tax obligations.

Citations and references

• California Revenue and Taxation Code sections 6006, 6010, and 6012(c)(4)(A), including its subparagraph (B) reference (as cited)
• New federal ten-percent retail excise tax effective January 1, 1991 on the first retail sale of vehicles, boats, aircraft, jewelry and furs above specified prices — federal act, code section, thresholds, enactment date, regulations, and guidance not identified or supplied
• Title-transfer sales and leases treated as sales and purchases under sections 6006 and 6010 — no taxpayer transaction, contract, invoice, lease, tax calculation, return, or payment record supplied
• December 6, 1990 internal Board memorandum directing questions to Elizabeth Abreu and copied to Business Taxes Attorneys, followed in the same PDF by a draft “Annotation Luxury Tax” — no recipient response, operational directive, agency adoption beyond publication, audit, assessment, refund claim, appeal, or later outcome supplied
• Official Annotation 295.1252's January 1, 1991 effective date, ten-percent rate, covered luxury categories, section 6012(c)(4)(A), title-transfer and lease conclusions, and December 6, 1990 date — annotation omits the unidentified federal authority and price thresholds, section 6012's subparagraph (B) reference, memorandum addressee and author, internal note, question contact, copied attorneys, draft annotation provenance, missing transaction records, later outcome, and reliance status and supplies no additional proceeding record

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/295-1252.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Glenn A. Bystrom

From:

Gary J. Jugum

Subject:

New Federal Excise Tax Law – Tax on Luxury Items

295.1252

Date:

December 6, 1990

Effective January 1, 1991, the United States has imposed a new retail excise tax, on the first retail sale of vehicles, boats, aircraft, jewelry and furs to the extent that the price for such goods exceeds certain specified amounts. The rate of tax is 10 percent. Under subdivision (c) (4) (A) of Revenue and Taxation Code Section 6012, “gross receipt” do not include: “The amount of any tax (not including, however, any manufacturers’ or importers’ excise tax, except as provided in subparagraph (B)) imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or the consumer.” The new tax is excludable from “gross receipts,” under the provision quoted above. The amount of any such tax is nontaxable under the Sales and Use Tax Law, whether imposed with respect to a sale involving a transfer of title or a lease transaction which is treated as a “sale” and “purchase” under Revenue and Taxation Code sections 6006 and 6010
*note: Revenue and Taxation Code Section (c) (4) (A)
Any questions concerning this issue should be directed to Ms. Elizabeth Abreu

GJJ:sr
cc: Business Taxes Attorneys

Annotation
Luxury Tax
Effective January 1, 1991, the United States has imposed a new retail excise tax, on the first retail sale of vehicles, boats, aircrafts, jewelry and furs, to the extent that the price for such goods exceeds certain specified amounts. The rate of tax is 10 percent. The new tax is excludable from “gross receipts,” under Revenue and Taxation Code section 6012 (c)(4)(A). the amount of any such tax is nontaxable under the Sales and Use Tax Law, whether imposed with respect to a sale involving a transfer of title or a lease transaction which is treated as a “sale” and “purchase” under Revenue and Taxation Code sections 6006 and 6010. December 6, 1990.