Did California use tax apply to an Oregon-bought motorhome and tow trailer briefly brought home before five months of out-of-state travel?

Plain-English summary

California residents planned to buy a motorhome and auto tow trailer in Oregon, drive them home to clean and pack, and leave within one or two weeks for at least five months of travel outside California.

Driving the motorhome empty into California merely to prepare it meant its first functional use occurred in California, so use tax applied. If the motorhome instead towed the auto trailer into California, that towing was first functional use outside the state. Entry within 90 days still created a California-use presumption, but normal out-of-state use for at least five of the next six months would overcome it.

The tow trailer required its own analysis. Carrying the car into California meant first functional use outside the state; towing the empty trailer to California and first loading the car there meant first functional use in California and tax.

The letter advised retaining fuel, service, and other records documenting out-of-state use.

The chosen motorhome was manufactured in California, sold to the Oregon dealer in September 1996, and was one of about forty coaches produced before that model was discontinued. The buyers said they decided in January 1997 after failing to find the model in California and wanted California registration to fit their insurance and umbrella policy.

The request, purchase and registration papers, actual loading, exact entry and departure dates, travel and location logs, fuel and service evidence, tax computation, and later outcome are absent. The live annotation expressly says California registration for insurance did not affect the analysis, while the linked response records the question but does not separately state that registration conclusion.

Common questions

Why did an empty trip into California count against the motorhome?

Counsel treated driving solely to clean, pack, and outfit the motorhome as transport before its designed-purpose use. Its first functional use would therefore occur in California when used as a motorhome.

How could the motorhome have first functional use outside California?

Using it to tow the auto trailer from Oregon was use for a transportation purpose before entry. That did not by itself end the analysis because entry within 90 days still triggered the historical presumption.

How was the 90-day presumption overcome?

The opinion assumed normal, exclusive outside-state motorhome use for at least five of the six months immediately after entry. Counsel said that would exceed half the period and overcome the presumption, subject to actual documentation.

Why did the trailer need a separate analysis?

Carrying the automobile from Oregon was functional use outside California. Towing the empty trailer home and first loading it here placed functional use in California and produced tax under the letter.

What records did counsel recommend?

Fuel-purchase receipts, vehicle-service receipts, and other documents showing outside-state use during the relevant period. None is reproduced in the source.

Did California registration itself create tax?

The live annotation says registration for insurance did not affect the analysis. The supporting letter records the buyers' registration preference but does not separately state that answer, so the annotation is the only supplied basis for that point.

Is there an actual transaction result?

No. The response says its assumptions control and invites specific actual facts if they were wrong. No exact dates, loading or travel records, tax amount, audit, assessment, claim, appeal, or later outcome is supplied.

Citations and references

• California Revenue and Taxation Code sections 6201 and 6248 and Regulation 1620(b)(3) — cited for use tax, functional use, entry timing, and the outside-use-or-storage test; complete authorities, counting and proof rules, amendments, later history, and current law not supplied
• BTLG Annotation 570.0430 — cited for empty delivery before designed-purpose use; underlying opinion, complete facts and authority, history, later treatment, and current status not supplied
• February 18 request and April 29 response — no request, purchase, registration, insurance, loading, travel, use or tax records, applied audit, assessment, claim, appeal, or later outcome supplied
• Official Annotation 325.0080.400's historical analysis, registration statement, and date — omits most provenance, authority, documentation advice, missing records, later outcome, and reliance status and supplies no additional vehicle record

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 325.0080.400
• Original supporting opinion: 325.0080.400 PDF

Original ruling text

325.0080.400

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 445-6450
FAX (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
KATHLEEN CONNELL
Controller, Sacramento
________

April 29, 1997

JOHN CHIANG
Acting Member
Fourth District, Los Angeles
________
E. L. SORENSEN, JR.
Executive Director

Mr. M--- M--Ms. P--- P--XXXX- --- Drive, #XXX
---, CA XXXXX
Re:

Purchase of Motorhome and Auto Tow Trailer

Dear Mr. M--- & Ms. P---:
This is in response to your letter dated February 18, 1997 regarding the application of California use tax to the purchase of a motorhome and auto tow trailer. You state: “We are purchasing a motorhome and auto tow trailer from a dealer in Oregon. The motorhome was made by a manufacturer in California and sold to this Oregon dealer in September of 1996. The manufacturer only produced about forty of these particular coaches last year and then discontinued making this model. We decided to purchase this motorhome model in January of 1997, but could not find the model in the state of California. “We plan to use this motorhome in Minnesota, Wisconsin and New Jersey as a second home when we visit our families every year for five or six months. This year we are purchasing the motorhome at the end of February and driving to our home in California to clean and pack the vehicle. Then within one or two weeks we will proceed to New Jersey, Minnesota and Wisconsin for at least five months. “We prefer to register the vehicle in California for insurance purposes. All of our insurance is through an agent in California including a liability umbrella policy and we want this vehicle to be included under that policy.” Your letter goes on to state that the motorhome and auto tow trailer will be purchased in the state of Oregon, and will be driven to your home in California where you will clean and pack the motorhome, and then proceed to New Jersey, Minnesota and Wisconsin where you will use the motorhome as a second home. Specifically, you ask whether the purchase of the motorhome and auto tow trailer is exempt from California use tax.

Mr. M--- M--Ms. P--- P---

-2-

April 29, 1997
325.0080.400

Revenue & Taxation Code section 6201 imposes a use tax on the storage, use or other consumption in this state of tangible personal property purchased from any retailer. Regulation 1620(b)(3) explains when property purchased outside California is regarded as purchased for use in California: “[P]roperty purchased outside of California which is brought into California is regarded as having been purchased for use in this state if the first functional use of the property is in California. When the property is first functionally used outside California, the property will nevertheless be presumed to have been purchased for use in this state if it is brought into California within 90 days after its purchase, unless the property is used or stored outside of California one-half or more of the time during the six month period immediately following its entry into this state.... “For purposes of this subparagraph ‘functional use’ means use for the purposes for which the property was designed.” If the only use of the motorhome outside of California is to drive it empty into California for you to clean, pack, and outfit it for use, the first functional use of the motorhome would be in California. (BTLG Annot. 570.0430.) If such is the case, the motorhome will be regarded as having been purchased for use in California, and use tax will apply. If you use the motorhome to tow the auto tow trailer to California, you would make the first functional use of the motorhome outside California. Nonetheless, if you bring the motorhome into California within 90 days after its purchase, the law presumes you have purchased the motorhome for use in California. (Rev. and Tax. Code § 6248.) Tax applies unless you overcome this presumption. You would overcome the presumption by making normal use of the motorhome outside of California more than one-half of the time during the sixmonth period immediately following its entry into California. You state your intention to drive the motorhome and the auto tow trailer to New Jersey, Minnesota and Wisconsin and use the motorhome as a second home for at least five months. We understand that you will use the motorhome exclusively outside California for at least five months during the 6 months immediately following its entry into California. If such is the case, you will overcome the presumption that you purchased the motorhome for use in California, and use tax will not apply. In that event, you should retain records for audit purposes to document the use of the motorhome during the time it is used outside California. The records should consist of fuel purchase receipts, vehicle service receipts or other documents showing the use of the vehicle outside the state. Of course, the same analysis applies to your use of the tow trailer. If you use it to carry your car back to California, the first functional use of the auto tow trailer would be outside California. If the only use of the auto tow trailer is to tow it to California, where you will load your vehicle onto it for your travel to New Jersey, Minnesota and Wisconsin, the first functional

Mr. M--- M--Ms. P--- P---

-3-

April 29, 1997
325.0080.400

use of the auto tow trailer would be in California. If such is the case, the auto tow trailer will also be regarded as having been purchased for use in California, and use tax will apply.

Mr. M--- M--Ms. P--- P---

-4-

April 29, 1997
325.0080.400

This opinion is based on the facts stated in your letter and the assumptions made above. If our assumptions are incorrect, this opinion may not apply . If such is the case and you wish an opinion applicable to the actual facts of the transaction, please write again and describe the transaction with specificity. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:cl

cc:

Oakland District Administrator (CH)
Our-of-State District Administrator (OH)