Did time spent repairing an accident-damaged car in Europe count as out-of-state use under California's historical 90-day rule?

Plain-English summary

A California resident bought a car in West Germany, drove it on European business travel, and suffered a serious accident in France about a month later. The damaged car returned to West Germany for extensive repairs while the owner returned to the United States. It was shipped to California only after the repairs were complete.

The audit counted out-of-state use only until the owner's return. The hearing officer rejected that cutoff. Under section 6009, arranging and completing the foreign repairs was an exercise of ownership power and therefore continued use of the vehicle outside California.

The repair period was not time spent storing the car for shipment to California. Combined with the earlier driving, it pushed the out-of-state use beyond the historical 90-day period in Regulation 1620(b)(3), so the recommendation was to cancel the deficiency.

The detailed chronology was August 13 arrival in West Germany, August 14 purchase, a September 17 accident in France, the owner's October 12 return, December repair completion and December 19 shipment, followed by January 14, 1986 California arrival. The officer said nothing on October 12 ended the owner's power over the damaged car.

The petition, audit workpapers, accident and repair records, shipment documents, hearing transcript, adopted decision, and later outcome are absent. The live annotation compresses the dates to approximate months and adds later amendment markers and a temporary twelve-month rule without their texts.

Common questions

Why did repair count as use after the owner returned?

Arranging and completing extensive repair was an exercise of ownership power under section 6009. Physical absence did not end that power while the car remained in West Germany.

Why was repair time not excluded shipment time?

The vehicle was severely damaged and remained for repair, not merely stored awaiting transport to California. It was shipped only after repair completion.

What cutoff had audit staff used?

Staff counted roughly 60 days from August 14 through the owner's October 12 return. The hearing officer said the basis was unclear because staff had already counted some post-accident repair time and nothing changed the ownership use on the return date.

What was at stake at the hearing?

The protested item was the West Germany vehicle purchase measured at $24,500. The source supplies no tax-rate calculation or final amount after the recommended cancellation.

Was cancellation final?

The document is a Decision and Recommendation. No adopted Board decision, final redetermination, refund, payment adjustment, appeal, or later outcome is supplied.

What later material appears only in the live annotation?

It marks amendments “2006–1” and “2008–1” and notes a conditional twelve-month presumption from October 2, 2004 through June 30, 2007 under Regulation 1620(b)(5). The texts and effect are absent.

Citations and references

• California Revenue and Taxation Code section 6009 and Regulation 1620(b)(3) — cited for repair use, entry timing, and shipment storage; complete authorities, counting and proof rules, amendments, later history, and current law not supplied
• Business Taxes Law Guide Annotation 570.1320 — cited for repair as use; underlying opinion, complete facts and authority, history, later treatment, and current status not supplied
• Petition, audit, November 25 hearing, and December 8 recommendation — no underlying records, transcript, adopted decision, payment, refund, appeal, or later outcome supplied
• Official Annotation 325.0103's amendment markers, temporary-law note, and historical summary — supplies no later texts and omits hearing provenance, amount, recommendation posture, missing records, final outcome, and reliance status

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/325-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0103.pdf

Original ruling text

STATE OF CALIFORNIA

325.0103

BOARD OF EQUALIZATION

In the Matter of the Petition
for Redetermination Under the
Sales and Use Tax Law of:
G--- V. R---

Petitioner

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DECISION AND RECOMMENDATION

No. SA UT XX XXXXXX-010

The preliminary hearing on the above taxpayer’s petition for redetermination was held on November 25, 1987, in Van Nuys, California. Hearing Officer:

John B. Adamo

Appearing for Petitioners:

G--- V. R---

Appearing for the Sales and
Use Tax Department:

Greg McNamee
Tax Auditor
Protested Items
State, Local
and County

Item
Purchase of vehicle in West Germany

$24,500

Contention of Petitioner
The automobile was purchased in Europe and remained out of state more than 90 days prior to its entry in California. Summary The relevant facts are not in dispute. Petitioner arrived in West Germany on or about August 13, 1985. He purchased the vehicle in question on August 14, 1985 in Frankfurt, West Germany. Thereafter, petitioner used the automobile in Europe on business travel, until he was involved in a serious automobile accident in France on September 17, 1985.

G--- V. R---

-2-

December 8, 1987
325.0103

The vehicle was severely damaged in the accident and could no longer be driven. Petitioner avoided serious injury, and made arrangements to have the automobile shipped back to West Germany for extensive repair. Thereafter, petitioner used public transportation, until his return to the United States on October 12, 1985. The vehicle remained in West Germany until the repairs were completed; it was shipped to California from West Germany on December 19, 1985 and arrived in this state on January 14, 1986. The subject deficiency determination was issued based upon the staff’s conclusion that the vehicle was purchased for use in California. The staff concluded that petitioner had used the automobile outside of California for less than 90 days after the date of purchase, and, specifically, that petitioner had “used” the vehicle in Europe for only approximately 60 days, i.e., from August 14 through October 12, 1985. Analysis and Conclusions In relevant part, Sales and Use Tax Regulation 1620(b)(3) provides: “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. When the property is first functionally used outside of 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. Prior out-of-state use not exceeding 90 days from the date of purchase to the date of entry into California is of a temporary nature and is not proof of an intent that the property was purchased for use elsewhere. Prior out-of-state use in excess of 90 days from the date of purchase to the date of entry into California, exclusive of any time of shipment to California, or time of storage for shipment to California, will be accepted as proof of an intent that the property was not purchased for use in California.” (Emphasis added.) The term “use” is defined in Revenue and Taxation Code Section 6009 to include “the exercise of any right or power over tangible personal property incident to the ownership of that property….” It is unclear on what basis the staff has concluded that petitioner used the vehicle out of state for less than 90 days from the date of purchase, or on what basis it has concluded that his “use” ceased on October 12, 1985. Apparently, the staff has acknowledged that petitioner’s repair of the car constitutes a “use” thereof because it has included in its computation of use the period from September 17 through October 12, 1985. Nothing happened on the latter date to change petitioner’s exercise of power over the vehicle. The automobile remained in West Germany until the repairs were completed in December. The fact that petitioner returned

G--- V. R---

-3-

December 8, 1987
325.0103

to the United States on October 12, 1985 does not mean that he ceased to “use” the vehicle in Europe. Petitioner’s repair of the vehicle in Germany constitutes a “use” thereof under Section 6009. (See also Business Taxes Law Guide Annotation 570.1320, Oct. 15, 1969.) The period of repair did not constitute time for shipment to California. (Cf. Regulation 1620(b)(3).) Petitioner’s use of the vehicle out of state far exceeded 90 days from the date of purchase, and he is therefore not liable for use tax on the purchase. Recommendation Cancel the deficiency determination.

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John B. Adamo, Hearing Officer

December 8, 1987
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Date