Did a one-sale quarter trigger a late-return penalty when the seller became a retailer only upon its third sale the next quarter?

Plain-English summary

An unidentified district made retail equipment sales on November 3, 1958, February 2, 1959, and March 30, 1959. It had not filed a return for the fourth quarter of 1958, when only the first sale had occurred. The district, equipment, buyers, prices, invoices, returns, payment, and calculations are not supplied.

Counsel said the district did not become a retailer under then-section 6019 until its third sale, which occurred during the first quarter of 1959. It therefore had no duty to file a fourth-quarter return after making only one sale.

Tax on all three sales would be timely if paid by April 30, 1959. On that timing, neither section 6511's 10-percent penalty nor interest attached to the November sale. No filed return, payment, assessment, refund claim, appeal, or later outcome is supplied.

The live annotation publishes the third-sale trigger and no-penalty conclusion but omits the three transaction dates, absent request and acknowledgment, named staff, missing records, and outcome gap.

Common questions

Did the first sale become tax-free?

No. The letter said tax on all three sales should be paid; it addressed when the filing and payment became due.

Can a present-day seller use the same three-sale threshold?

This page does not say that. It reports the rule applied in 1959, and current law may use different definitions and thresholds.

Citations and references

• California Revenue and Taxation Code section 6019 — applied as making the district a retailer upon its third sale under the then-current rule; complete text, definitions, exceptions, amendments, later history, and current law not supplied
• California Revenue and Taxation Code section 6511 — cited for the questioned 10-percent penalty; complete text, conditions, computation, exceptions, amendments, later history, and current law not supplied
• April 6 request, April 7 acknowledgment, and April 13, 1959 response — no request or acknowledgment, district identity, equipment, buyers, prices, invoices, returns, payment, calculation, requester reply, assessment, claim, appeal, or later outcome supplied
• Official Annotation 320.0080's third-sale trigger, timely-reporting conclusion, no-penalty rule, and date — omits the transaction dates, correspondence provenance, named staff, missing records, later outcome, and reliance status and supplies no additional transaction 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/320-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/320-0080.pdf

Original ruling text

320.0080

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 13, 1959

Gentlemen:
Your letter of April 6 to our Madera office has been referred to this office for reply, after being acknowledged under date of April 7 by J. R. Couly, District Tax Administrator, Fresno. According to your letter you made three sales at retail of equipment, the first on November 3, 1958, the second on February 2, 1959, and the third on March 30, 1959. The question concerns the application of the 10% penalty under Section 6511 of the Sales and Use Tax Law upon the amount of the sale made on November 3, 1958, and interest, no return having been filed for the 4th quarter of 1958. As these were the only sales made by the District, Mr. Couly suggests that perhaps the district was not a retailer until the third sale was made on March 30, 1959, and therefore was not obligated to file a return at the end of the 4th quarter, at which time only one sale had been made. In our opinion, the law did not require the filing of a return for the 4th quarter, only one sale having been made up to that time. The District did not become a retailer under Section 6019 until the making of the third sale, which occurred in the 1st quarter of 1959. Accordingly, payment of the tax with respect to all three sales will be considered timely if made on or before April 30, 1959, and no penalty or interest will attach to the amount of the sale made on November 3, 1958.

Very truly yours,

E. H. Stetson
Tax Counsel

EHS:tl
cc: Fresno - Administrator