Could dredging equipment qualify as a foreign-commerce sale when it was delivered to a purchaser-furnished barge and carried to the purchaser's foreign job site?

Plain-English summary

Oakland Auditing's October 6, 1964 memorandum asked Headquarters tax counsel about a redacted taxpayer's sales-tax redetermination petition. Counsel understood that on September 10, 1962 a redacted party ordered dredging equipment from another redacted party for dredging operations. The order, petition and audit record are absent.

The equipment was placed aboard a redacted vessel and barge, whose owners also are redacted, and transported to a redacted job site. The live annotation supplies facts hidden in the PDF: the purchaser used the equipment in Japan, the barge was owned by the purchaser's agent, and it carried the equipment to the purchaser's Japan job site. No delivery, title, control, transport or use records are supplied.

The historical rule described an exempt foreign-commerce sale where property was sold to a foreign purchaser, delivered to a purchaser-furnished ship for carriage abroad, actually carried to a foreign destination, transferred to the purchaser's title and control on delivery, and not used or consumed in the United States.

Tax counsel concluded that the transaction met Ruling 55 A(1)(e) even if the common carrier was treated as the purchaser's agent for taking delivery. The source repeats “for the purpose of taking delivery of” and otherwise leaves the transaction heavily redacted.

The memorandum supplies no assessment amount, hearing, petition decision, payment, refund, appeal or final Board outcome. The live annotation publishes the Japan destination and agent-owned barge but omits the audit/request provenance, historical rule conditions, missing evidence, source defect and opinion-only posture.

Common questions

What made the historical foreign-commerce rule apply?

The purchaser furnished the ship, the goods were actually carried abroad, title and control passed on delivery, and no portion was used or consumed in the United States.

Did purchaser-agent delivery defeat the result?

No. Counsel said the transaction still qualified even if the common carrier took delivery as the purchaser's agent.

How do we know the job site was in Japan?

The live official annotation supplies Japan; the supporting PDF redacts the destination.

Does the source identify the equipment, barge or carrier?

No. Those details and the underlying order, ownership and transport records are absent or redacted.

Was the petition finally granted?

The memorandum gives counsel's opinion but supplies no hearing, decision or final Board action.

Citations and references

• Sales and Use Tax Ruling 55 A(1)(e) — historical purchaser-furnished-ship rule and conditions
• September 10 order and transport records — described but not reproduced
• October 6 Oakland Auditing request and redetermination petition — absent
• Official Annotation 325.0660 — supplies Japan and the agent-owned barge while omitting material provenance and limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0660
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0660.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Oakland - Auditing {TFP)

From:

Tax Counsel (GAT) - Headquarters

325.0660

Date:

November 19, 1964

Subject:

This is in reply to your memorandum of October 6 regarding the petition for redetermination of sales tax filed by ---. It is our understanding that on September 10, 1962, ---, ordered certain dredging equipment from --- for use in dredging operations for the ---.
--We understand that the equipment was actually placed aboard --- and Barge ---. The --- is owned by ---, and Barge --- is owned by ---. The dredging equipment was transported to the job site in ---. As indicated in ruling 55, sales tax does not apply to sale property which is sold to a foreign purchaser for shipment abroad and delivered to a ship furnished by the purchaser for the purpose of carrying the property abroad and actually carry to a foreign destination, title and control of the property passing to the foreign purchaser upon delivery and no portion of the property being used or consumed in the United States. It is our opinion that even if the Common Carrier is regarded as being an agent of --- for the purpose of taking delivery of --- for the purpose of taking delivery of the equipment in --- the terms of the sale fell within the provisions of ruling 55 A (1) (e), inasmuch as the equipment was transported on --- barge to --- job site in ---.

GAT:mm