Did a seller's shipping mistake preserve exemption when the customer accepted a recorder in California and then forwarded it to the intended out-of-state location?

Plain-English summary

A video-tape-recorder seller's March 20 letter described one machine that the customer had requested at a redacted outside location. The seller mistakenly shipped it to the customer's redacted California location, where a customer employee accepted it and reshipped it to a redacted destination. The request, parties, locations, order, sales agreement, invoice, carrier and shipment records are absent.

Tax counsel concluded that the purchaser's California acceptance completed a taxable sale regardless of the original intent. The purchaser's later outside shipment did not convert the sale into an exempt interstate transaction. The letter attributed the exemption to constitutional grounds and unidentified court holdings requiring seller shipment to the outside point under the sales agreement; it supplied no constitutional provision or case citation.

The shipping mistake did not excuse sales tax on a transaction actually handled in a taxable manner. The letter also said Revenue and Taxation Code sections 6008 and 6009.1 concerned only use tax and did not bear on this sales-tax transaction. It does not reproduce the seller's reason for invoking those sections.

No sales price, taxable measure, return, assessment, payment, refund claim, appeal or later outcome is supplied. The live annotation preserves the shipping-error, customer-employee acceptance, purchaser reshipment and sales-tax conclusion but generalizes the recorder to goods. It omits the March 20 request, constitutional and sales-agreement rationale, use-tax-section distinction, absent evidence and procedural gap.

Common questions

Did the seller's intended outside destination control?

No. Counsel focused on the transaction as performed: the purchaser accepted the recorder in California.

Did the buyer's later outside shipment preserve exemption?

No. The letter said the seller had to ship to the outside point under the sales agreement; purchaser reshipment after California acceptance was too late.

Did the seller's mistake excuse the tax?

No. Counsel said the mistake was not legally sufficient when the transaction actually was handled through taxable California delivery.

Why did sections 6008 and 6009.1 not help?

The letter characterized both as use-tax provisions, while this situation involved only sales tax. The source does not reproduce the seller's contrary argument.

Which court decisions supported the result?

The letter refers only to what “the courts have held.” It provides no case names or citations.

Does the source show an assessment or payment?

No. It supplies no invoice, sales price, tax measure, return, assessment, payment, claim, appeal or later result.

Citations and references

• Revenue and Taxation Code sections 6008 and 6009.1 — identified as use-tax provisions irrelevant to this sales-tax transaction; complete authorities and current law absent
• Unidentified constitutional grounds and court holdings — described as requiring seller shipment under the agreement; no provision, case citation or full rule supplied
• March 20 request and transaction records — only the shipping-error facts are summarized; agreement, locations, invoice, carrier, acceptance and reshipment proof remain absent
• April 9 response — treats California purchaser acceptance as taxable despite the mistake; no measure, proceeding or later outcome supplied
• Official Annotation 325.0560 — generalizes the recorder to goods and omits the authority, evidence and procedural limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0560
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0560.pdf

Original ruling text

325.0560

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 9, 1959

Attention:

Mr. Houstin Shockey
Tax Counsel

Gentlemen:
This is in reply to your letter of March 20 in which you state that you sell video tape recorders, and in one instance a recorder was erroneously shipped by you to the --location of your customer rather than to its --- location as it had requested. An employee of your customer accepted delivery of the machine and reshipped it to ---. It thus appears that, regardless of the original intent, the sale was, in fact, completed upon delivery of the machine to the purchaser in this State. This resulted in a taxable sale and it was not rendered exempt by the subsequent shipment by the purchaser to a point outside this State. The exemption is based on constitutional grounds and the courts have held that this requires shipment by the seller pursuant to the sales agreement to the out-of-State point. Delivery to the buyer or his representative in this State will not suffice to satisfy the requirements of the constitutional exemption. Regardless of the fact that a mistake was made, this is not, in our opinion, legally sufficient to excuse payment of the sales tax with respect to a transaction actually handled in such a manner that the tax under the law applies thereto. The provisions of Sections 6008 and 6009.1 of the California Revenue and Taxation Code have no bearing on this matter, as they are concerned solely with the application of the use tax. The present situation involves solely an application of the sales tax.

Very truly yours,

E. H. Stetson
Tax Counsel