Could a vehicle export remain tax-free when the seller could not be listed as bill-of-lading shipper because the buyer containerized many items?
Apply this to your situation
This page answers the general question as of 1992. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
An August 19 Board letter had recommended listing a redacted automobile seller as shipper when it arranged tax-free vehicle export. A September 8 follow-up said this sometimes was impossible: a purchaser might combine the vehicle with many items from other sources, and the bill of lading could not be prepared until months-later containerization and ship loading.
Counsel allowed tax-free export when the seller could not be shipper only if it followed three steps:
- Deliver the vehicle directly to the shipper, freight forwarder or export packing company.
- Give written foreign-delivery instructions denying the purchaser power to divert or cancel, and receive the intermediary's written compliance confirmation.
- Obtain a bill of lading proving the vehicle shipped to the foreign destination.
Following that procedure made the vehicle irrevocably committed to export. The PDF calls the governing rule “Regulation 2610”; the live annotation corrects it to Regulation 1620(a)(3)(C)2.
Section 6366.2 supplied a separate route when a foreign-country resident arranged a new-vehicle purchase through an authorized dealer abroad. United States delivery and limited local driving could qualify if the purchaser had a Vehicle Code section 6700.1 in-transit permit and, before it expired, the retailer shipped or drove the vehicle outside the United States through its facilities or delivery to a carrier, customs broker or forwarder.
No actual vehicle, purchaser, instruction, confirmation, bill, permit, foreign delivery, tax filing or later proceeding is supplied. The live annotation generalizes the opinion from vehicles to tangible personal property and omits the separate new-vehicle route.
Common questions
Why could the seller not always appear as shipper?
The purchaser might combine a vehicle with numerous other-source items, delaying the bill of lading until all goods were containerized and loaded months later.
Who had to receive the vehicle first?
The seller had to deliver directly to a shipper, freight forwarder or export packing company, not release it to the purchaser for uncontrolled handling.
What written controls were required?
Seller instructions required foreign delivery and barred purchaser diversion or cancellation; the intermediary then had to confirm compliance in writing.
What final proof was needed?
A bill of lading indicating actual vehicle shipment to the foreign destination.
Was temporary United States driving ever allowed?
The separate § 6366.2 route conditionally allowed it for a foreign resident's new vehicle arranged through an authorized foreign dealer, with an in-transit permit and timely retailer-controlled export.
Which date and regulation number control this source?
The first page and annotation support November 18, 1992, despite an October 14 continuation header. The PDF's “2610” conflicts with the annotation's Regulation 1620(a)(3)(C)2.
Citations and references
- Regulation 1620(a)(3)(C)2 — live annotation's export-commitment rule; PDF prints 2610
- Cal. Rev. & Tax. Code § 6366.2 and Cal. Veh. Code § 6700.1 — separate foreign-resident new-vehicle route
- August 19 and September 8, 1992 letters — identified but not reproduced
- Official Annotation 325.1385 — generalizes the vehicle procedure and resolves the regulation number
Source
- Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
- Annotation page: Annotation 325.1385
- Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1385.pdf
Original ruling text
325.1385
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
WILLIAM M. BENNETT
First District, Kentfield
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6496
BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles
November 18, 1992
GRAY DAVIS
Controller, Sacramento
BURTON W. OLIVER
Executive Director
Ms. M--- -. K--S--- A--- Corporation
XXX --- --- Boulevard
--- ---, CA XXXXX
Re:
Overseas Shipment of Vehicles
SR -- XX-XXXXXX
Dear Ms. K---:
This office has received your letter dated September 8, 1992 in which you referenced a letter sent to S--- A--- Corporation ("S---") by this office. In that earlier letter dated August 19, 1992, we recommended that S--- should be listed as the shipper when it arranges for the tax-free export of vehicles sold by it. In your September 8th letter, you state that there are situations where S--- cannot be listed as the shipper of exported automobiles. You further state that, as an example, a purchaser may be shipping many items overseas and a bill of lading cannot be prepared until all of the items are containerized and placed aboard ship. You state that this process could take months and S--- cannot be listed as the shipper when most of the items shipped were purchased from other sources. In the situation where S--- has sold a vehicle for export on a tax-free basis and cannot be listed as the shipper: 1) S--- should deliver the vehicle directly to the shipper, freight forwarder or export packing company. 2) S--- should provide written instructions that the vehicle is to be delivered to the foreign designation and the purchaser is not to have the ability to divert or cancel the shipment. S--- should receive a written confirmation from the shipper, freight forwarder or export packing company that it will comply with these instructions.
Ms. M--- -. K---
-2-
October 14, 1992
325.1385
S--- should obtain a copy of the bill of lading indicating that the vehicle was 3) shipped to the foreign destination. If this procedure is followed, it is our opinion that the vehicle "is irrevocably committed" to the exportation process within the meaning of Regulation 2610 and the sale will be considered tax-free. We would call to your attention a section of the California Revenue and Taxation Code (§ 6366.2). This section provides that if a resident of a foreign country arranges for the purchase of a new vehicle through an authorized dealer in the foreign country, the vehicle may be delivered directly to the purchaser in the United States. He/she may drive the vehicle for a limited period in the United States and the purchase will not be subject to tax if certain conditions are met. Those conditions are: 1) The purchaser has been issued an in-transit permit pursuant to section 6700.1 of the California Vehicle Code. 2) Prior to the expiration of the in-transit permit issued to the purchaser, the retailer ships or drives the motor vehicle to a point outside the United States by means of facilities operated by the retailer, or by delivery to a carrier, custom broker or forwarding agent for shipment to that point. Very truly yours,
Thomas J. Cooke
Tax Counsel
TJC:wk
bc:
--- --- District Administrator
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