Was German sales tax included in California's tax measure when a consumer imported a new Porsche or bought one through a California dealer?

Plain-English summary

German sales tax paid at the source remained part of the California tax measure for a new Porsche. The memorandum analyzed both a consumer's direct purchase in Germany for California use and a California dealer's sale of a vehicle ordered from Germany.

For a direct purchase, the cited sales-price exclusions and other-state use-tax credit did not cover taxes paid to foreign countries. For a dealer sale, the gross-receipts exclusions likewise did not remove the German tax.

In both situations, the foreign tax was part of the total amount paid for the vehicle and therefore remained in the California measure under the source's analysis.

Citations and references

• California Revenue and Taxation Code sections 6011, 6012, 6015, 6201, and 6406 (as cited)
• December 5, 1968 Occasional Sales note asking whether German sales tax on a new Porsche entered the California tax measure — note and attachments, if any, not reproduced in the official PDF
• German sales tax paid at source — foreign statute, rate, assessment, invoice, payment, and German tax record not identified or supplied
• Two possible facts posed by counsel: a consumer purchase in Germany for California delivery or use, and a California dealer sale of a vehicle ordered from Germany for the consumer — no confirmed transaction, purchase agreement, dealer order, invoice, shipment, customs, registration, trade-in, return, or credit record supplied
• January 16, 1969 internal tax-counsel memorandum — no recipient response, transaction treatment, return, audit, assessment, refund claim, agency adoption beyond publication, appeal, or later outcome supplied
• Official Annotation 295.1280's foreign-manufacturer tax, invoice to a California consumer, inclusion conclusion, and January 16, 1969 date — annotation presents one invoice fact rather than the supporting memorandum's two possible scenarios and omits the December 5 note, Porsche, German direct-purchase alternative, statutory exclusion and credit analysis, missing foreign authority and 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/295-1280.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Occasional Sales (LTD)

From:

Tax Counsel (TPP:LAA)

Subject:

German Sales Tax

295.1280

Date:

January 16, 1969

Your note of December 5, 1968 asked whether German sales tax paid on a new Porsche should be included in the taxable measure for purposes of our Sales and Use Tax Law. In our opinion it should be included. Two possible fact situations come to mind: (1) the auto was purchased by the consumer in Germany for delivery (or shipment to) and use in California; and (2) the auto was purchased in California from a dealer who ordered the auto for the consumer. In the first case, the use tax would apply, and under Section 6201 the measure would be the sales price. Section 6011 provides that "sales price" does not include any taxes imposed on retail sales by the United States, any sales tax imposed by any city, county, or city and county in California, or any use tax imposed by any city, county, or city and county. Section 6406 provides a credit against use tax for taxes paid to any other state or political subdivision thereof, or the District of Columbia. Nowhere in either Section 6011 or 6406 is any mention of taxes paid to foreign countries; the exemption is limited to taxes paid other states, the United States, and political subdivisions of states. On the other hand, Section 6011 defines "sales price" as "the total amount for which tangible personal property is sold." It would appear that the price including German sales tax paid at the source is the total amount for which the Porsche was sold. In the second case, the sales tax would apply; and under Section 6015, the measure is the gross receipts of the retailer. Section 6012, defining "gross receipts" excludes the same taxes excluded by Section 6011 in defining "sales price". No special section exists providing an exemption from sales tax for taxes paid other jurisdictions. "Gross receipts" also means the "total amount of the sale", and the conclusion is the same that German sales tax, paid at the source, is part of the total amount of the sale. LAA :ph [lb]