Was tax on a refunded core deposit also refunded when the customer later returned a used auto part?

Plain-English summary

California gave different refund treatment depending on the replacement part sold.

When the customer bought a new part, paid tax on the price plus a core deposit, and later returned a used part, the customer received only the core deposit back. The tax paid on that deposit was not refunded or credited.

When the customer bought a reconditioned part under the same basic sequence, returning the used core entitled the customer to both the core deposit and the tax paid on that deposit.

Common questions

Did returning a core always produce a tax refund?

No.

What happened for a new replacement part?

Only the deposit was refunded.

What happened for a reconditioned replacement part?

The deposit and the related tax were refunded.

Citations and references

The supporting opinion does not cite a specific statute or regulation for this distinction.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/315-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/315-0370.pdf

Original ruling text

315.0370

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 322-2378

February 27, 1980

Ms. J--- B. S--G---, S--- & E--XXX --- Road, #XXX
---, CA XXXXX
Re:

G--- A--- Inc.
SY – XX-XXXXXX
Sales Tax on Automobile Parts

Dear Ms. S---:
As you requested on the telephone today, following is a brief outline of our position with respect to the taxation of core deposits on auto parts sold by G--- A---. 1)

New Parts – The customer purchases the part, leaves a core deposit, and is charged tax on the total. Later, he brings in his used part. Under these circumstances, he would be entitled to a credit or refund of the core deposit only. Tax paid with respect to the core deposit should not be credited or refunded to him;

2)

Reconditioned Parts – The customer purchases the part, leaves a deposit, and is charged tax on the total. Later, he brings in his used part. Under these circumstances, he would be entitled to a credit or refund of the core deposit plus tax paid with respect to it. Very truly yours,

Les Sorensen
Tax Counsel

LS:po