Did California tax electronics shipped by common carrier from Arizona to a California forwarder solely for onward delivery to a Hawaii resort?

Plain-English summary

An electronics seller first wrote Return Review on March 2. After an adverse April 27 opinion, its operations manager supplied two more facts on May 2 and requested reversal: the purchaser resort was in Hawaii, and a named recipient was a freight forwarder receiving solely for shipment to that resort.

The seller shipped electronic equipment by common carrier from an Arizona location to the California freight forwarder, which then sent it to the Hawaii purchaser.

On those added facts, counsel reversed the earlier opinion. The sale did not occur in California; the purchaser took neither possession nor use here; and forwarder delivery continued the interstate Arizona-to-Hawaii shipment. California sales and use tax did not apply.

The live annotation calls the seller a California retailer shipping from its Arizona location, a characterization the PDF does not expressly state beyond the seller's Arizona address and account metadata.

No purchase order, carrier bill, forwarder agreement, Hawaii delivery, tax amount, filing, audit or later outcome is supplied.

Common questions

What new facts changed the opinion?

The buyer was a Hawaii resort, and the California recipient was a freight forwarder receiving solely to ship the property there.

Did the buyer take California possession or use?

No, according to counsel's factual conclusion.

Why did the California stop not break interstate movement?

It was forwarder receipt for continued shipment, not buyer delivery or use; the journey remained Arizona to Hawaii.

Was the first opinion reproduced?

No. The March and May letters, April opinion and its Regulation 1620 enclosure are all absent.

Did the source establish a final tax or refund result?

No. It states the revised advisory conclusion but supplies no audit, assessment, payment, refund or appeal record.

Citations and references

• California Sales and Use Tax Regulation 1620(a) and (b) — continuous interstate shipment
• March/May letters and April opinion — identified but not reproduced
• Official Annotation 325.1536 — supplies California-retailer characterization

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1536
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1536.pdf

Original ruling text

325.1536

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6493

July 3, 1990

Mr. J--- de G--Operations Manager
T--- C---, Inc.
XXXX S. XXth Street
---, AZ XXXXX
T--- C---, Inc. – SC -- XX-XXXXXX
F--- S--- H--- – SR -- XX-XXXXXX
Interstate shipments – delivery to freight forwarder
Dear Mr. de G---:
In your letter of May 2, 1990 to me, you replied to my opinion letter to you dated April 27, 1990, related to a sale of electronic equipment by T--- C--- to F--- S--- H---. With respect to this transaction, your letter adds the following additional facts to your March 2, 1990 letter the to Board’s Return Review Unit: “1.

F--- S--- Resort --- is located in the State of Hawaii.

“2.

B--- S--- Inc. (213) 299-2640 is a freight forwarder to whom shipment was made for the sole purpose of shipping to F--- S--- Resort --- in Hawaii.”

With this additional information, you ask me to reverse my opinion in my April 27, 1990 letter and find the transaction in question nontaxable. In brief, your two letters state that in the transaction in question, T--- C--- shipped the electronic equipment by common carrier from ---, Arizona to B--- S---, Inc., a California freight forwarder, who in turn shipped the equipment to the purchaser, the F--- S--- H--- in Hawaii. Based on these facts, we agree with your contention that California sales or use tax does not apply to this transaction. The sale did not occur in California, and the purchaser did not take possession of the property in California or make any use of that property in California. T---’s shipment of the property to a California freight forwarder constitutes the continuation of an interstate shipment from Arizona to Hawaii of the property sold. (See Reg. 1620 (a) and ( b), copy enclosed with my April 27, 1990 letter to you).

Mr. Jim de Generes

-2-

July 3, 1990
325.1536

Please feel free to contact me if you have any further questions or comments about this letter. Sincerely,

John Abbott
Senior Tax Counsel

JA:jb