Could a California dealer avoid collecting use tax on a motorhome delivered to a resident outside the state for more than 90 days of use?

Plain-English summary

When title passed to the buyer outside California, California sales tax did not apply. A California dealer selling to a known California resident still faced a section 6247 presumption that the motorhome was bought for California use and generally had to collect use tax.

A purchaser's written statement that the motorhome was bought for out-of-state use could protect the dealer if taken in good faith. Asking the dealer to register the vehicle in California could call that good faith into question. The statement protected only the dealer's collection duty; it did not erase the buyer's tax liability if the motorhome was actually purchased for California use.

For the buyer, more than 90 days of functional use outside California before entry, excluding shipment or storage for shipment, established that the vehicle was not purchased for California use under the cited regulation. California registration did not change that result by itself.

The letter separated an outside-state sale from the use-tax question. The dealer bore the burden to prove title passed outside California, while its collection protection depended on the section 6247 statement or other satisfactory evidence. If tax still applied to the purchaser, the letter directed payment to DMV upon registration or identification.

The request, signed statement, title and delivery papers, registration, use and entry evidence, dealer-knowledge facts, tax amount, collection, DMV payment, and enclosed Regulation 1610 are absent. The live annotation uses Regulation 1620(b)(4) for the later outside-use rule rather than the supporting letter's Regulation 1610(e)(2), and adds later amendment markers and a temporary twelve-month note without their texts.

Common questions

Why did outside-state delivery avoid sales tax but not automatically avoid use tax?

Title passing outside California placed the sale outside the sales tax under the cited rule. A separate use tax still applied if the resident bought the motorhome for California storage, use, or consumption.

What did section 6247 require from the dealer?

For property delivered outside California to a person known to be a resident, the dealer faced a California-use presumption. A signed written statement retained by the dealer, or other satisfactory evidence, could rebut it if accepted in good faith.

How could California registration affect good faith?

A buyer's request that the dealer register the motorhome here could put a reasonably prudent business on notice of California use. Counsel said later proof of California-use intent could cause the dealer's claimed good-faith acceptance to be questioned.

Did a valid dealer statement eliminate the buyer's liability?

No. It could relieve the dealer's collection responsibility even when the buyer actually purchased for California use, but it did not eliminate the purchaser's underlying tax unless a separate exemption or no-tax rule applied.

When did more than 90 days outside California establish no California-use purchase?

The letter required functional use outside California in excess of 90 days between purchase and entry, excluding shipment and storage for shipment. It called the then-cited Regulation 1610(e)(2) result irrebuttable and said registration did not alter it.

What happens when use tax applies at registration?

The letter cited section 6292 and Regulation 1610(c)(1) for purchaser payment to DMV when applying for vehicle registration or identification. No actual registration, payment, or amount is supplied.

What later material appears only in the live annotation?

It cites Regulation 1620(b)(4), marks amendments “2006–1” and “2008–1,” and notes a conditional twelve-month presumption from October 2, 2004 through June 30, 2007 under subdivision (b)(5). The later texts and their relationship to the 1996 citation are not supplied.

Citations and references

• California Revenue and Taxation Code section 6051, Regulation 1620(a)(1), and California Uniform Commercial Code section 2401 — cited for sales tax, title, delivery, and retailer proof; complete authorities, procedures, amendments, later history, and current law not supplied
• California Revenue and Taxation Code sections 6201, 6401, 6202, and 6203 and Regulation 1620(b) — cited for use tax and dealer collection; complete authorities, procedures, amendments, later history, and current law not supplied
• California Revenue and Taxation Code section 6247 and California Uniform Commercial Code section 1201(19) — cited for the resident presumption, written statement, and good faith; complete authorities, form and proof rules, amendments, later history, and current law not supplied
• California Revenue and Taxation Code section 6292 and Regulation 1610(c)(1) — cited for DMV payment; complete authorities, procedures, exceptions, amendments, later history, and current law not supplied
• Regulations 1620(b)(1), 1620(b)(3), and 1610(e)(2), section 6248, and BTLG Annotation 570.0430 — cited for functional use, entry presumptions, outside use, and registration; complete authorities, underlying opinions, counting and proof rules, amendments, later history, and current law not supplied
• June 25 request, missing Regulation 1610 enclosure, and August 12 response — no request, enclosure, sale, statement, vehicle-use, tax, collection, DMV, audit, assessment, claim, appeal, or later outcome records supplied
• Official Annotation 325.0081's cross-reference, amendment markers, temporary-law note, and historical analysis — supplies no later texts and omits most provenance, authority, records, later outcome, and reliance status

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 325.0081
• Original supporting opinion: 325.0081 PDF

Original ruling text

325.0081

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
TELEPHONE (916) 324-2614
FAX (916)323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles

August 12, 1996

KATHLEEN CONNELL
Controller, Sacramento
_______
E. L. SORENSEN, JR.
Executive Director

Mr. --- -. -----, - & --- ----- --- --- ---, Suite -----, CA 9XXXX Re: Unidentified Taxpayer Dear Mr. ---: This is in response to your letter dated June 25, 1996, regarding the application of tax to out-ofstate sales of motorhomes by your client, a motorhome dealer. You ask: “1). If a California resident takes delivery of a motorhome (pursuant to the contract of sale) out of state with the intention of using the vehicle (functional use, etc.) for a period of not less than 90 days outside the state of California, is this vehicle subject to either sales or use tax? “2). Would the answer be any different if this customer registered the vehicle in California? “3). If the retailer who makes the out-of-state delivery obtains a statement from the buyer stating no use will be made in California for at least 90 days, will he be relieved of the liability to collect use tax?” DISCUSSION Retail sales of tangible personal property in California are subject to sales tax, measured by gross receipts, unless the sale is specifically exempt from taxation by statute. (Rev. & Tax. Code § 6051.) Where title to property sold passes to the purchaser at a point outside this state, sales tax does not apply, regardless of the extent of the retailer’s participation in California in relation to the transaction. (Reg. 1620(a)(1).) Title to property passes no later than the time at which the seller completes its responsibilities with respect to physical delivery of the property. (Cal. U. Com. Code
§ 2401.) The retailer has the burden of proving facts establishing that the sale occurred outside California. (Reg. 1620(a)(1).) When sales take place outside of California and sales tax therefore does not apply, use tax, measured by the sales price of the property sold, applies to the use of property purchased from a retailer for storage, use, or other consumption in California, unless the use is specifically exempt from taxation by statute. (Rev. & Tax. Code §§ 6201, 6401, Reg. 1620(b).) Although the purchaser owes the use tax, a retailer engaged in business in this state and making sales of tangible personal

Mr. --- -. ---

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August 12, 1996
325.0081

property for storage, use, or other consumption in this state is required to collect the applicable use tax from the purchaser and to pay that tax to this state. (Rev. & Tax. Code §§ 6202, 6203.) Our understanding is that your client is a licensed motorhome dealer in California. Therefore, your client must collect use tax from the purchaser of the motorhome where title to the motorhome passes to the purchaser outside this state if the motorhome is purchased for use in California. If your client sells a motorhome to a California resident, Revenue and Taxation Code section 6247 creates a presumption as to the retailer that property delivered outside of California to a purchaser known by the retailer to be a resident of California is regarded as having been purchased for use in California. The Section 6247 presumption may be controverted by a statement in writing, signed by the purchaser or the purchaser’s authorized representative, and retained by your client, that the property was purchased for use outside of California. The presumption may also be controverted by other evidence satisfactory to the Board that the property was not purchased for use in California. If your client takes a Section 6247 statement in good faith from a person known by your client to be a California resident, your client is no longer responsible for collecting use tax even if the purchaser actually purchased the motorhome for use in California. In order to regard the Section 6247 statement as being taken in good faith, your client must believe that the motorhome is being purchased for use outside of California and be without knowledge of any facts which would put a reasonably prudent business under the similar circumstances on notice that the motorhome is being purchased for use in this state. (See Cal. U. Com. Code § 1201(19).) Accordingly, if your client obtains a Section 6247 statement from a purchaser who requests that your client register the vehicle in California, and it is subsequently determined that the purchaser purchased the motorhome for use in California, your client’s good faith acceptance of the Section 6247 statement may be questioned. If the retailer does not collect use tax from the purchaser and the purchaser purchases the motorhome for use in California, the purchaser is not relieved of liability for the use tax unless an exemption applies. If use tax applies, as discussed below, the purchaser is required to pay the tax to the Department of Motor Vehicles, acting for and on behalf of the Board, at the time of making an application for registration or identification. (See Rev. & Tax. Code § 6292; see also Reg. 1610(c)(1).) Use tax applies to the purchaser’s use of the motorhome in California if the purchaser is regarded as having purchased the motorhome for use in California. (See Reg. 1620(b)(1).) Property 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. (Reg. 1620(b)(3).) “Functional use” means use for which the vehicle was designed. (BTLG Annot. 570.0430 (1/7/74; 3/23/84; 1/28/91.) Additionally, even if the first functional use of the property is outside of California, Revenue and Taxation Code section 6248 creates a presumption that any vehicle bought outside this state which is brought into California within 90 days from the date of its purchase was acquired for storage, use, or other consumption in this state. Under such circumstances, use tax would apply unless the property is used or stored outside of California onehalf or more of the time during the six-month period immediately following its entry into this state. (Reg. 1620(b)(3).)

Mr. --- -. ---

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August 12, 1996
325.0081

However, if the motorhome is functionally used outside of California in excess of 90 days from the date of purchase prior to the date of entry into California, exclusive of any time of shipment to California, or time of storage for shipment to California, Sales and Use Tax Regulation 1610(e)(2) provides that such use will be accepted as proof of an intent that the vehicle was not purchased for use in California. In effect, Regulation 1610(e)(2) creates an irrebuttable presumption that a vehicle is not purchased for use in California if the requirements in this regulation are met. Therefore, under such circumstances, use tax would not apply. We note that this analysis would apply regardless of whether the motorhome is registered in California. If you have any further questions, please write again. Sincerely,

Sophia H. Chung
Tax Counsel
SHC:rz
---

Enclosure: Regulation 1610
cc: --- --- District Administrator-FH