Were German-language brochures exempt from California sales tax when the printer delivered them here and the customer later exported them?

Plain-English summary

A redacted California printer's credit manager wrote on June 20, 1996 after printing brochures for a California customer, delivering them to the customer and charging tax at an unstated rate. The customer then said half of the German-language brochures would go to Germany and should not have been taxed. The request, brochures, quantity, invoice, rate, tax and delivery records are absent.

After researching Regulation 1620, the credit manager had told the customer that its “touching” the product made it taxable and that printer shipment to an exporter or Germany instead would have been nontaxable. Counsel agreed with the result for the completed sale, using the more precise irrevocable-export-commitment rule.

Delivery to the purchaser in California occurred before the brochures were irrevocably committed to export, so the entire sale was taxable. The result would have differed if the printer had mailed or shipped the export brochures by carrier directly to Germany; that retailer-controlled shipment would have qualified for the export exemption even if the purchaser hired the carrier.

The alternative is hypothetical: the source supplies no printer-to-Germany shipment. It also gives no refund, adjustment, assessment or later outcome for the tax already charged. The stated Regulation 1620 enclosure is absent.

The live annotation preserves the actual California-delivery result and August 8 date but omits the charged-tax and request provenance, the printer's own analysis, the direct-Germany alternative, missing records and outcome. It also prints “intention of the purchases” where the quoted source says purchaser.

Common questions

Did the customer's plan to export half make that half exempt?

No. The printer had already delivered all brochures to the customer in California.

Did actual later transport to Germany change the completed sale?

No. The quoted rule made purchaser intent and actual later foreign transport immaterial after California delivery before export commitment.

What transaction would counsel have treated differently?

The printer itself mailing or shipping the brochures by carrier to Germany, even if the customer hired the carrier.

Had the printer already charged tax?

Yes, but the source supplies no rate, amount, payment, refund or adjustment record.

Is there proof the customer exported the brochures?

No. The letter reports the customer's plan but includes no carrier, customs or delivery evidence.

Citations and references

• Revenue and Taxation Code section 6051 — California retail-sales rule
• Regulation 1620(a)(3)(C)(1) and (D)(2) — purchaser delivery before export commitment and retailer foreign shipment
• June 20 request and transaction records — described but not reproduced
• Regulation 1620 — stated enclosure absent
• Official Annotation 325.0667 — publishes the taxable result while omitting material provenance and limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0667
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0667.pdf

Original ruling text

325.0667

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION (MIC:85)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0085)
Telephone: (916) 324-2629
FAX: (916) 324-2618

DEAN ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

E. L. SORENSEN, JR.
Executive Director

August 8, 1996

Mr. C--- M--Credit Manager
D--- C--XXXX --- Way
--- ---, California XXXXX
Re:

Account No. SR -- XX-XXXXXX

Dear Mr. M---:
This responds to your letter dated June 20 regarding the application of sales tax to your charges for brochures. In your letter, you state that: “We have printed brochures for our client, H--- L--- Industries, and shipped them to H--- L--- here in California. They have been taxed at the appropriate rate. H--- L--- Ind. has notified us that they are shipping half of the brochures which are printed in German to Germany, therefore they should not be taxed. “After researching regulation 1620, I have informed them that since they ‘touched’ the product, it is taxable. If we had sent the ‘German’ brochures to an exporter or shipped them to Germany, then they would be non-taxable. “If there is another regulation we are not aware of, please inform us.” We agree with your conclusion that sales tax applies to your sale of the brochures in this state. As you are aware, the retail sale of tangible personal property in this state is subject to sales tax. (Rev. & Tax. Code § 6051.) Tax does not apply, however, if the sale is specifically exempt from tax by statute.

Mr. C--- M---

-2-

August 8, 1996
325.0667

The sale to H--- L--- Industries of printed brochures that they intend to export to Germany is a retail sale in California. The sale does not qualify for the export exemption in Regulation 1620. As explained in subdivision (a)(3)(C)(1) of Regulation 1620, “sales tax applies when the property is delivered to the purchaser or the purchaser's representative prior to an irrevocable commitment of the property into the process of exportation. It is immaterial that the disclosed or undisclosed intention of the purchaser is to ship or deliver the property to a foreign country or that the property is actually transported to a foreign country.” Here, the brochures were delivered to H--- L--- Industries in California. The sale was complete at that time, before the entry of the brochures into the stream of export. Sales tax applies. However, the application of the export exemption to sales tax would have been different if you had mailed or shipped the brochures by carrier to Germany. As subdivision (a)(3)(D)(2) of Regulation 1620 explains, “Sales tax does not apply when the property is sold to a purchaser for shipment abroad and is shipped or delivered by the retailer to the foreign country.” Had you sent the brochures to Germany by carrier, whether hired by you or H--- L--- Industries, the transaction would qualify for the export exemption. I hope this discussion has answered your questions. If you need anything further, please do not hesitate to write again. Very truly yours,

Robert E. Thomas
Tax Counsel
RET/cmm
Enclosure (Reg. 1620)