Were goods in export when title passed at Natomas delivery but the purchaser held them indefinitely in California before eventual Peru shipment?

Plain-English summary

An unidentified client's sales-and-use-tax redetermination petition was reviewed using information from a preliminary hearing. Counsel found no legal basis to adjust the originally determined tax measure.

Title passed no later than Natomas, California deliveries, when counsel said tax attached. After transshipment, the purchaser held the property for indefinite periods before eventual Peru shipment. The live annotation adds that storage occurred at facilities of a related corporation, a detail absent from the PDF.

During that holding period the property had neither begun its export journey nor become irrevocably committed. Intended and actual later export were insufficient: citing Empresa and Flying Tiger, counsel said even a bright export prospect was not part of exportation.

The failure-to-file penalty also remained. Counsel used an incomplete section 6421 quotation to treat the purchaser as liable for sales tax as a retailer, which carried a return duty; because no returns were filed, section 6511 applied.

The matter was to be scheduled for “predetermination,” with notice later. No notice or final Board action is supplied.

A note says the hearing occurred June 10 in San Francisco and two attached copies of an approved August 19 hearing-officer report were lost, per David Levine on December 4, 1997.

The live annotation publishes only the export-storage conclusion, supplies the related-corporation facility and omits the petition, penalty and procedural record.

Common questions

When did counsel say tax attached?

When title passed no later than the Natomas deliveries, before a begun and irrevocably committed export journey.

Did actual later Peru export prove exemption?

No. The goods had first remained in California for indefinite periods; intent and eventual export did not turn that holding into exportation.

Why did the filing penalty apply?

Counsel treated the purchaser as liable for sales tax as a retailer, found a return-filing duty and said no returns had been filed.

Was the related corporation identified in the PDF?

No. That storage-facility relationship appears only in the live annotation.

Was this the final redetermination?

No. The letter says a later proceeding and notice would follow. The report was lost and no later notice or Board action is supplied.

Citations and references

• Cal. Rev. & Tax. Code §§ 6421 and 6511 — retailer liability/return duty and filing penalty
• Empress Siderurgica v. County of Merced, 337 U.S. 154 — source name; reporter resolves to Empresa
• Flying Tiger Line, Inc. v. State Board of Equalization, 157 Cal. App. 2d 85 — verified reporter
• August 19 hearing-officer report — approved, attached copies later recorded lost
• Official Annotation 325.1400 — supplies related-corporation storage and omits penalty/procedure

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1400
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1400.pdf

Original ruling text

325.1400

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 3, 1964
--- --- ----- --- ----- --- --Dear --- ---:
We have reviewed your client’s petition for redetermination of sales and use tax in the light of information obtained at the preliminary hearing on this matter. It is our opinion that no legal basis exists for adjustment to the measure of tax originally determined. As was indicated to you at the preliminary hearing, the determinative issue is whether the property in question was in the process of export at the time title to the property was obtained. We have concluded that title to the property passed your client no later than the date of the deliveries in Natomas, California. The incidence of the tax occurred at this time. After transshipment, the property was held by your client for indefinite periods prior to shipments to Peru. During this period, the property had not begun its export journey nor was it irrevocably committed to export. While the surrounding facts and circumstances indicate that the property was intended for export and, indeed, was subsequently exported, this is not sufficient to classify the property as being in the process of export. The prospect of export, no matter how bright, does not constitute a part of the exportation (Empress Siderurgica v. County of Merced, 337 U.S. 154 [and Flying Tiger Line, Inc., v. State Board of Equalization, 157 Cal. App. 2d 85].) We have also concluded that the penalty for failure to file was properly applied. Under the provisions of § 6421, a purchaser in the circumstances of your client, is liable for the payment of sales tax….” Since there was an obligation to pay sales tax as a retailer imposed by the statute, the duty to file returns and declare this tax also attaches. Since no returns were filed, the penalty provisions of § 6511 of the Revenue and Taxation Code (failure to file) apply. This matter will now be scheduled for predetermination and your client will receive notice of predetermination in due course. Very truly yours,

W. E. Burkett
Associate Tax Counsel
cc:

--- --- District Administrator
Attached are two copies of hearing officer’s report dated 8-19-64, which has been approved. This hearing was held in San Francisco on June 10, 1964. (Both have been lost per David Levine, 12/4/97).