Could a vessel's California reassembly entry be ignored when section 6009.1 excluded qualifying activity done solely for later transport and use outside?

Plain-English summary

An attorney described a vessel first functionally used outside California, later brought into California for reassembly, then transported and used outside California again. The October 25, 1996 request is absent, so no vessel, dates or transaction records are available.

The requester argued that first outside functional use plus reassembly solely for later outside transport/use meant treating the episode “as if the vessel never came into California.” Counsel disagreed.

Section 6009.1 excluded keeping, retaining or exercising ownership rights from “storage” and “use” only when done to transport the property outside California for use thereafter solely outside. That exclusion did not erase the historical fact that the vessel entered California or prevent application of Regulation 1620(b)(3).

Counsel separately said that if the vessel reentered California more than six months after the date it left, that later California use was not subject to use tax. The source gives no departure/reentry dates or calculation.

The live annotation paraphrases the statute as excluding property “presence” and inserts “(reassembly)” into a quotation. It then says a return within six months makes the California reassembly time “use.” The supporting letter instead distinguishes potentially excluded activity from the entry that still counts. No source explains the apparent wording tension.

Common questions

Did section 6009.1 erase California entry?

No. Counsel said the Board still recognized that the property had been brought into California and still applied Regulation 1620(b)(3).

What activity could section 6009.1 exclude?

Keeping, retaining or exercising rights over property, but only when for later transport outside California and use thereafter solely outside.

Was reassembly itself always excluded?

The source does not announce that broad rule. It quotes the statutory purpose condition and supplies no reassembly facts or proof that sole outside use was satisfied.

What happened if the vessel later returned?

The letter said California use was not taxable if reentry occurred more than six months after the date the vessel left. It does not state the within-six-month result directly beyond requiring Regulation 1620 analysis.

Did the page establish any actual dates?

Only the October 25 request date and December 2 response date. Vessel acquisition, first use, entry, departure and reentry dates are absent.

Was a final tax determination supplied?

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

Citations and references

• California Revenue and Taxation Code section 6009.1 — qualifying activity exclusion
• California Sales and Use Tax Regulation 1620(b)(3) — California entry still counted
• October 25, 1996 attorney letter — identified, not reproduced
• More-than-six-month reentry statement — given without dates or computation
• Official Annotation 325.1728 — paraphrases the statute and introduces unresolved wording tension

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 325.1728
• Original supporting opinion: 325.1728 PDF

Original ruling text

325.1728

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 323-3787
FAX (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego

December 2, 1996

BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento
___

Mr. C--- J--- W---, LL.M.
W--- & C--Attorneys at Law
XXXX --- --- --- Drive, Suite XXX
--- ---, CA XXXXX
Re:

E. L. SORENSEN, JR.
Executive Director

Revenue and Taxation Code Section 6009.1

Dear Mr. W---:
This is in response to your letter dated October 25, 1996 regarding the application of Revenue and Taxation Code section 6009.1 when a vessel is first functionally used outside the State of California, is subsequently transported to California for reassembly, and is thereafter transported and used outside the State of California. If the vessel re-enters the State of California more than six months after the date the vessel left California, the use of the vessel in this state is not subject to use tax. We disagree with your conclusion that, as long as the vessel is first functionally used outside the State of California, its entry into California for re-assembly for the purpose of subsequently transporting it outside the state for use thereafter solely outside the state is not counted “as if the vessel never came into California.” Revenue and Taxation Code section 6009.1 provides that “storage” and “use” do not include keeping, retaining or exercising any right or power over tangible personal property only when it is for the purpose of subsequently transporting the property outside the state for use thereafter solely outside the state. The Board of Equalization does not ignore the fact that the property was brought into California and, therefore, does not disregard the application of subdivision (b)(3) of Regulation 1620. Please write again if you have further questions. Very truly yours,

Charlotte Chyr
Tax Counsel
CC:cl
cc:

--- --- District Administrator