Were medical items, fuel, ice, lubricants, and other supplies sold to steamship operators exempt because they would be used outside California?

Plain-English summary

A redacted New York corporation's assistant purchasing agent sent an October 15 letter about California retail sales tax on medical items and other ship supplies. The source gives no year for that request and does not reproduce it.

Tax counsel quoted part of Ruling 55. It taxed tangible personal property such as fuel oil and ship supplies bought by steamship operators for their own use even when consumption would occur on the high seas or outside California. It separately said tax did not apply to property bought for resale aboard ship through the commissary or otherwise.

The requester also said its Sales and Use Tax “Booklet” contradicted itself on medical equipment. Counsel knew of no contradiction and invited citation to the exact provisions so any problem could be fixed at the next printing. No booklet or follow-up is supplied.

The letter applied operator-use taxation to all ship supplies and specifically named ice, greases, gasoline, lubricating oils and kerosene. It then called strict section 6385 compliance the “only exception,” without expressly reconciling that phrasing with the earlier onboard-resale sentence.

The quoted section 6385 route required a seller's sale to a common carrier, shipment by that seller via the purchasing carrier under a bill of lading to a point outside California, actual transportation there and use in the carrier's common-carrier business. Freight could be prepaid or collect.

An inline bracket marked DHL 1/10/91 excludes fuel and petroleum products from the section 6385 quote. It postdates the 1953 letter and supplies no amendment citation or explanation.

The live annotation lists gasoline, greases, ice, kerosene, lubricating oils and medical supplies as nonexempt personal property under “the regulation.” It omits the resale language, section 6385 route, strict conditions, later fuel note and booklet issue.

Common questions

Did consuming supplies on the high seas avoid tax?

No for property the steamship operator bought for its own use. Ruling 55 made high-seas or outside-California consumption irrelevant to that sale.

What if the ship bought property for resale?

The quoted ruling said tax did not apply when property was purchased for resale through the ship's commissary or otherwise.

What did section 6385 require?

Seller shipment via the purchasing common carrier under a bill of lading, actual transport to an out-of-state destination and use there in the carrier's business. The transaction records are absent.

Did the section 6385 quote cover fuel?

The PDF contains a later bracket saying “other than fuel and petroleum products (DHL 1/10/91).” It supplies no underlying amendment or explanation, so that note should not be treated as part of the original 1953 advice.

What was contradictory about medical equipment?

The source never says. Counsel asked the requester to identify the allegedly conflicting booklet provisions, but no booklet or reply is supplied.

Did the letter decide an actual assessment?

No transaction, return, audit, assessment, payment, refund or appeal outcome appears.

Citations and references

• California Sales and Use Tax Ruling 55, Interstate and Foreign Commerce — partly quoted operator-use and onboard-resale rules
• Sales and Use Tax Booklet — alleged contradiction without edition, provisions or copy
• California Sales and Use Tax Law section 6385 — quoted strict common-carrier shipment route
• other than fuel and petroleum products (DHL 1/10/91) — later inline parenthetical without supporting source
• October 15 requester letter — identified without year, not reproduced
• Official Annotation 325.1700 — omits the favorable routes and underlying conditions

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.1700
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-1700.pdf

Original ruling text

325.1700

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 2, 1953

U--- S--- P--- C---, Inc.
XXX --- Avenue
--- --- XX, New York
Attention:

Mr. W. W. K--Assistant Purchasing Agent

Gentlemen:
This is in answer to your letter of October 15 concerning the application of the California retail sales tax to sales of medical items and other ships’ supplies. We quote the following portion of Sales and Use Tax Ruling 55, Interstate and Foreign Commerce: “Sales tax applies to sales to operators of steamships of tangible personal property such as fuel oil and ships’ supplies, irrespective of the fact that the property will be consumed on the high seas or outside the territorial limits of this State. Tax does not apply to sales of tangible personal property purchased for resale on board ship through the ship’s commissary or otherwise.” You state that the Sales and Use Tax “Booklet” that you now have contradicts itself as respects medical equipment. We are unaware of any contradictory portions and would appreciate your calling our attention to the specific provisions which you believe to be contradictory so that, if such contradiction exists, it may be corrected at the next printing. As you will note from the above quotation from Ruling 55, sales tax applies to sales to operators of steamships of all tangible personal property used as ships’ supplies. This includes, of course, the items mentioned by you, ice, greases, gasoline, lubricating oils, and kerosene. The only exception is where a vendor and his vendee conform strictly to the requirements of Section 6385 of the Sales and Use Tax Law which is quoted herewith for your convenience:

U--- S--- P--- C---, Inc.

-2-

November 2, 1953
325.1700

“There are exempted from the computation of the amount of the sales tax the gross receipts from sales of tangible personal property to a common carrier
[other than fuel and petroleum products (DHL 1/10/91)] shipped by the seller via the purchasing carrier under a bill of lading whether the freight is paid in advance, or the shipment is made freight charges collect, to a point outside this State and the property is actually transported to the out-of-state destination for use by the carrier in the conduct of its business as a common carrier.” Very truly yours,

E. H. Stetson
Tax Counsel
EHS:ph

cc:

New York (SS)