Was a chassis sale exempt when the seller sent it to a body works, received the completed unit back and then delivered it to a carrier for outside shipment?

Plain-English summary

A redacted chassis seller first wrote on November 6, 1958 and attached a purchase order containing a "Bailee Clause." The Board requested more information on December 17, and the seller replied on December 29. None of those documents is included with the published response.

On counsel's review, the purchase order required the seller to deliver certain White motor chassis to its customer at a designated destination outside California after equipping them with bodies that the customer had bought from a redacted source.

Before outside shipment, the customer directed the chassis seller to deliver the chassis to a body works for installation. Counsel understood that the completed units then came back to the chassis seller, which delivered them to a common carrier for shipment to the designated outside destination under the original order.

Tax Counsel E. H. Stetson treated the chassis sale as an exempt interstate sale under historical Sales and Use Tax Ruling 55 A-1-(c). The seller's continuing obligation and its receipt and carrier tender of the completed units supported that answer despite the intermediate installation.

The source supplies no party identities, complete order or clause, chassis quantity, body specifications, destination, carrier record, price, tax amount or later proceeding. The live annotation calls the seller a retailer and compresses the plural units into one chassis, body and completed unit, while omitting the three-letter correspondence history.

Common questions

Did delivery to the California body works end interstate-sale treatment?

No, under these facts. The purchase order still required the chassis seller to deliver the body-equipped units outside California.

Who bought the bodies?

The out-of-state customer bought them from a redacted source. The purchase and body contract are not reproduced.

What happened after body installation?

Counsel understood that the completed units returned to the chassis seller, which delivered them to a common carrier for the designated outside shipment.

Was the bailee clause alone enough to establish exemption?

The letter does not announce that general rule. It relies on the entire stated sequence, including the seller's outside-delivery duty and its carrier tender after receiving the finished units.

What additional information did the Board request?

The source does not say. It identifies the December 17 request and December 29 reply but reproduces neither.

Does the source document an assessment or refund?

No. It supplies no price, tax amount, filing, audit, assessment, payment, claim, appeal or later outcome.

Citations and references

• Sales and Use Tax Ruling 55 paragraph A-1-(c) — historical exemption cited but not reproduced
• November 6 purchase order and bailee clause — described as attached to an absent request
• December 17 information request and December 29 response — identified but absent
• January 21, 1959 Tax Counsel response — finds an exempt interstate sale on the stated sequence
• Official Annotation 325.0820 — compresses the sequence and omits its correspondence provenance

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0820
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0820.pdf

Original ruling text

325.0820

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 21, 1959

Attention:
Gentlemen:
We have reviewed the problem originally presented in your letter dated November 6, 1958, which was followed by our letter of December 17 requesting additional information, to which you replied under date of December 29. Upon review of the entire matter, it appears that you were required by the purchase order, a copy of which was attached to your letter of November 6 and the "Bailee Clause" constituting part of that purchase order, to deliver to your customer at an out-of-state destination certain White motor chassis, equipped with bodies purchased by your customer from --- Prior to shipment of the completed unit, you are directed to deliver the chassis to the body works for installation of the bodies thereon. After installation, as we understand it, the completed units were delivered to you and you in turn, pursuant to the original purchase order, delivered the completed units to a common carrier for shipment to a designated out-of-state destination. Under these facts, it is our opinion that your sale of the chassis to your customer constitutes an exempt interstate sale under the provisions of Sales and Use Tax Ruling 55, paragraph A-l-(c).

Very truly yours,

E. H. Stetson
Tax Counsel

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cc: San Francisco - Administrator