Could printers hold completed large orders for later shipping instructions, report tax when shipment occurred and exempt goods sent outside California?

Plain-English summary

An August 17, 1950 internal memorandum records that a redacted visitor had come to the Board the day before, mainly on another matter. The visitor mentioned a prior discussion with the memorandum's unidentified recipient about when printers should report sales tax on large printing sales to a redacted company.

The purchase orders said shipping instructions would arrive later. A printer held completed materials until receiving them, then shipped some goods within California and some outside the state. The orders and shipment records are absent.

Some printers reportedly had been told to return tax for the quarter when the job was completed or billing issued, then take a later deduction for outside-state material. The source contains an extraction character defect in that sentence, printing "o£" where context concerns the reporting quarter.

The company preferred that printers bill tax reimbursement only on property eventually sent to California points. It took the position that title did not pass until shipment. If that position was correct—which the memorandum called reasonable—the printers would report tax only in the shipment period.

The E. H. Stetson-attributed memorandum saw no objection as long as the purchase order required shipment according to later instructions and the printer actually shipped that way. Tax applied only to sales of property sent to California points; goods sent outside the state were not subject to sales tax under the stated view.

The live annotation reduces the issue to delayed outside shipment and adds that deferral must be for a reasonable time. That express timing limit does not appear in the supporting PDF, which instead discusses mixed destinations, tax-return timing, reimbursement and the company's title position.

No statute, regulation or case is cited, and the source documents no completed order, shipment, tax return, deduction or later proceeding.

Common questions

When did the memorandum say printers should report tax?

In the period when shipment occurred, if the company's title-at-shipment position was correct and the orders and shipments met the stated conditions.

Which goods were taxed under the proposed procedure?

Only property shipped to points within California. Goods shipped outside the state were treated as not subject to sales tax.

What had some printers reportedly been told before?

To report tax for the quarter of job completion or billing, then later deduct the material shipped outside California. The source identifies neither the speaker nor legal authority.

Did delayed instructions alone guarantee exemption?

No. The purchase order had to specify shipment under later instructions, and the printer had to make shipment accordingly. The live annotation also adds a reasonable-time condition.

Was title passage proven by the contracts?

No. The company asserted that title did not pass until shipment, and the memorandum called that position reasonable, but the orders are absent.

Does the source identify the printers or actual reporting entries?

No. It supplies no printer, order, return, deduction, invoice, tax amount, shipment record or later audit outcome.

Citations and references

• August 16, 1950 visitor discussion — reported without a record
• Redacted-company purchase orders with later shipping instructions — described but absent
• Prior tax-reporting and deduction procedure — reported without its source or authority
• August 17, 1950 E. H. Stetson-attributed memorandum — conditional shipment-period method without cited law
• Official Annotation 325.1020 — adds a reasonable-time condition absent from the PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1020
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1020.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

From:

325.1020

Date:

August 17, 1950

E. H. Stetson

Subject:

When Mr. --- was here yesterday, primarily in connection with another matter, he mentioned that he had discussed with you the question of the proper time for reporting sales tax by printers who sell printing to --- Company in large quantities pursuant to purchase orders which specify that shipping instructions will be given at a later date. The printer holds the material until receipt of shipping instructions and then ships the material, some of which goes to points outside the State. It appears that some of the printers have been told that they should return the tax as o£ the quarter in which the job is completed or billing rendered, and take a deduction subsequently as to that material shipped outside the State. Mr. --- indicated that the Company preferred a procedure by which the printers would not bill the Company for any tax reimbursement except as to that property shipped to points in this State, stating that it is the position of --- Company that there is no passage of title of the merchandise until shipment is made. If this is the case, which appears reasonable, the printers would not be obligated to return any tax until the period in which shipment is made, and the tax would apply only to the sales of that property shipped to points in the State. Mr. --- stated that in his discussion with you you did not indicate that any serious accounting difficulties would result if this procedure were followed, and I see no objection to it as long as the purchase order specifies that shipment is to be made in accordance with instructions to follow, and that shipment is so made. As to goods so shipped to a point outside this State, it is our opinion that the sales tax is not applicable.

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