Were chassis taxable when sold by a New York office, sent from Ohio to California for tank installation and then shipped as completed trucks to outside customers?

Plain-English summary

A redacted seller filed a petition and supplemental petition for redetermination. Tax Counsel E. H. Stetson addressed two groups of items and said he was prepared to recommend adjustments; the source records no final Board action.

The first group consisted of three chassis entries for quarters ending December 31, 1949 and December 31, 1950. The table lists protested-item figures of 6858.24, 6966.17 and 7002.06 without a printed currency symbol, paired with truck numbers 371998, 381923 and 382245.

According to counsel, the petitioner's New York office sold the three trucks f.o.b. factory in Cleveland, Ohio. They went to Butler Manufacturing Co. in Richmond, California for tank installation. Butler then shipped the first two completed trucks to Seattle and the last to Phoenix.

Counsel treated those transactions as exempt interstate sales and the tank installation as no taxable California use. He recommended deleting the three items from the determination's tax measure. The source variously prints the heading as sales of "trunks" to "The Taxes Company," then refers to "The Taxas Company" and "The Texas Company." It does not resolve which buyer name was intended.

The second group was $16,406.04 of sales to International Engineering Co., Inc. Purchase orders went to the petitioner's San Francisco office, and the merchandise went to named California export packers for overseas packaging. A clause purported to make those packers bailees for the seller.

Counsel instead treated the packers as the purchaser's agents because the purchaser used and paid them. Delivery to the packers was therefore delivery to the purchaser. He recommended treating those sales as taxable under Board policy while an unidentified action involving the same transaction type remained pending, unless and until a final court decision held such sales nontaxable.

A later DJH note points to a section 6387 exemption effective September 7, 1955—more than two years after the letter—but gives no text or application. The letter offered to schedule the petitioner's requested informal hearing or a Board hearing. It does not say whether either occurred or how the petition ultimately ended.

The live annotation publishes only the chassis exemption and no-use conclusion. It omits the item table, source spelling conflicts, named places and installer, export-packer recommendation, pending case, later statutory note and nonfinal hearing posture.

Common questions

What happened to the three chassis items?

Counsel recommended deleting them from the determination's tax measure because the sales appeared exempt as interstate sales and tank installation was not a taxable California use.

Where did the trucks travel?

They went f.o.b. from a Cleveland factory to Butler Manufacturing in Richmond for tanks; Butler then sent two to Seattle and one to Phoenix.

Are the three protested-item figures dollar amounts?

The source labels them "Protested Items" but prints no currency symbol. This page therefore preserves the figures without adding one.

Why were the export-packer sales treated differently?

The purchaser selected and paid the California packers, so counsel treated them as purchaser agents and their receipt as delivery to the purchaser despite the bailee clause.

What was the pending court action?

The letter does not identify it. It supplies no case name, court, docket, ruling or later outcome.

Did section 6387 govern the 1953 recommendation?

The contemporaneous letter does not cite it. A later inserted note merely points to an exemption effective September 7, 1955 and does not apply it to the petition.

Was this the final redetermination decision?

No final action is shown. Counsel made recommendations and offered an informal or Board hearing on request.

Citations and references

• Three chassis protested-item entries — figures and truck numbers preserved without adding a currency symbol
• International Engineering Co., Inc. purchase orders and bailee clause — described but absent
• Unidentified pending action concerning export-packer deliveries — no court record supplied
• California Revenue and Taxation Code § 6387 — later note citing an exemption effective September 7, 1955
• February 10, 1953 Tax Counsel recommendation — no final Board disposition supplied
• Official Annotation 325.0860 — publishes only the chassis exemption and California-use result

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0860
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0860.pdf

Original ruling text

325.0860

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 10, 1953

Gentlemen:
Account No.
We have reviewed your petition for redetermination and your supplemental petition and are prepared to make the following recommendations for adjustment:

1. Sales of trunks to The Taxes Company.
   Quarter Ending

Protested Items

Truck Number

12/31/49
12/31/50
12/31/50

6858.24
6966.17
7002.06

371998
381923
382245

It is our understanding that each of the above trucks were sold by your New York office and shipment was made f.o.b. factory, Cleveland, Ohio, to Butler Manufacturing Co., Richmond, California, for the installation of tanks. After the tanks were installed on the chassis, Butler shipped these trucks to The Taxas Company, the first two to Seattle, Washington, and the last to Phoenix, Arizona. This would indicate that the sales to The Texas Company are exempt from sales tax as interstate sales and since the installation the tanks was not a taxable use in this State, the use tax would not apply. For this reason we will recommend that these items be deleted from the measure of tax as set forth in the determination.

2. Sales to International Engineering Co., Inc., aggregating $16,406.04.
   It is our understanding that the purchase orders for these items were sent to your San Francisco office and the merchandise covered by these purchase orders was delivered to export packers in California. The purchase orders contained a "Bailee Clause" to the effect that the merchandise was to be delivered to named export packers for packaging for overseas shipment and "it is further understood and agreed that delivery of the commodities to the export packers, as indicated, will constitute delivery to such export packers as Bailee for you."

It is our opinion that the delivery to the export packers constituted a delivery to the purchaser. This is based on the fact that the export packers were in fact acting for the purchaser and were paid by the purchaser for their services. Under similar circumstances, the policy of the Board has been to treat such transactions as taxable sales. There is now pending an action involving the taxability of this same type of transaction and until there is a final court decision holding such transactions nontaxable, it is our policy to regard them as taxable. For this reason our recommendation is that these transactions be considered as taxable.
*Note: See exemption in Section 6387 eff. 9/7/55 DJH
Your petition for redetermination indicates that you desire an informal hearing before a-hearing officer. If you still desire such a hearing or a hearing before the Board, we will set the matter for hearing at your request.

Yours very truly,

E. H. Stetson
Tax Counsel

JHM: j a
cc: San Francisco - Auditing