Were store sales exempt exports when Mexican purchasers received the goods in California and then transported them to Mexico?

Plain-English summary

A redacted California retailer's manager claimed in an October 21, 1950 letter that certain store sales to Mexican nationals were exempt under historical Ruling 55. A redacted Board office also supplied a detailed account of the handling. Neither source document is reproduced. Counsel understood that the retailer delivered merchandise to purchasers at the store and the purchasers later transported it to Mexico.

Counsel said every foreign-commerce or export-sale condition had to exist and be supported by proper proof. Court decisions did not establish exemption after California delivery to the purchaser merely because the purchaser later transported the goods outside.

Richfield Oil did not support a broader rule. As counsel described it, the seller there delivered into an exporting carrier sent to receive and carry the goods abroad, and title passed when the goods became exports. Counsel would not extend that reasoning to goods delivered to the purchaser before placement on the exporting carrier.

Historical Ruling 55 A-1-(e) required delivery to the conveyance furnished by the purchaser for carrying the goods abroad. Store delivery to the purchaser, followed by the purchaser's own transport, did not satisfy that condition. Counsel therefore was unable to recommend allowing the sales as exempt; the source gives no later claim or audit decision.

A bracketed now see note signed DJH points to Regulation 1620(a)(3)(C)(2)(c), effective February 8, 1986. That later editorial marker is not part of the 1950 conclusion. The live annotation preserves the California-delivery and Richfield Oil distinction but omits the store/Mexican-national facts, request and Board-office provenance, Ruling 55 condition, proof requirement, recommendation posture and evidence gaps.

Common questions

Did the buyers' eventual transport to Mexico exempt the sales?

No. The retailer first delivered the goods to them at its California store.

What delivery did historical Ruling 55 require?

Seller delivery to the purchaser-furnished conveyance that would carry the goods abroad.

Why was Richfield Oil different?

The seller there delivered directly into an exporting carrier, and title passed as the goods became exports.

Was purchaser intent enough?

No. Counsel required all exemption conditions plus adequate proof, not merely intended later export.

Did the letter finally deny a refund or audit claim?

It says counsel could not recommend allowance; no amount, assessment, refund decision, appeal or later outcome is supplied.

Is the 1986 regulation part of the original 1950 advice?

No. It appears in a later bracketed now see note signed DJH.

Citations and references

• Sales and Use Tax Ruling 55 A-1-(e) — historical purchaser-conveyance condition
• Richfield Oil Co. v. State Board of Equalization, 329 U.S. 69 — seller-to-exporting-carrier distinction as described by counsel
• Regulation 1620(a)(3)(C)(2)(c), effective February 8, 1986 — later bracketed DJH note
• October 21 request and Board-office statement — described but not reproduced
• Official Annotation 325.0620 — preserves the case distinction while omitting material provenance and limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0620
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0620.pdf

Original ruling text

325.0620

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

October 30, 1950

H--XXX --- Street
--- ---, California
Attention:

Mr. G. K. B--Manager

Account:

--- - XXXX

Gentlemen:
This is in reply to your letter of October 21 concerning your claim that certain sales to Mexican Nationals made at your store in --- --- are exempt from sales tax under Sales and Use Tax Ruling 55. We have received from our --- --- Office a detailed statement of how these transactions are handled. We understand that you deliver the merchandise to the purchasers at your store who thereafter transport the merchandise to Mexico. In order to claim exemption from sales tax upon the ground that the sales are immune from taxation as sales in foreign commerce or as export sales, it is essential that all of the conditions of such exemption be present and adequately supported by proper proof. It is our opinion that none of the Court decisions pertaining to this subject are authority for the proposition that the sales tax does not apply where the goods are delivered to the purchaser in this State, even though the purchaser may subsequently transport the goods outside the State. The case of Richfield Oil Company v. State Board of Equalization, 329 U.S. 69, stands for the proposition that where the goods are delivered by the vendor into an exporting carrier sent to this country for the express purpose of receiving the goods and carrying them abroad, title to the goods passing to the buyer upon delivery into the exporting carrier, the sale was exempt upon the grounds that at the same time title passed the goods became exports. The basis and reasoning of the Court’s opinion does not in our opinion, warrant us in concluding that the Court would have adopted the same conclusion had the goods been delivered to the purchaser prior to the time they were placed upon the exporting carrier.

Mr. G. K. B---

-2-

October 30, 1950
325.0620

Ruling 55, A-l-(e), [now see, Reg. 1620(a)(3)(C)(2)(c), eff. 2/8/86. DJH], expressly provides as a condition of exemption that the goods shall be delivered to the conveyance furnished by the purchaser for the purpose of carrying the goods abroad. Accordingly, we are unable to recommend allowance of the sales in question as exempt export sales. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ph
cc:

Mr. J. S. Knight