Did California's historical film-and-tape lease exclusion cover audio-only tapes rented to radio stations, and who had to collect the tax?

Plain-English summary

An unnamed company manufactured and leased special audio tapes to radio stations nationwide, including California. Some California customers resisted paying use tax. Its October 13, 1969 letter requested formal answers about the lessor's collection duty, the station's duty to pay the lessor and California registration.

The opinion held that audio-only tapes did not fit historical section 6006(g)(1). The Board limited that exclusion to television and motion-picture film or tape containing video as well as audio, and stated without further constitutional analysis that the distinction was not unconstitutional.

As a manufacturer-lessor, the company had to collect California use tax when it collected rent for property in the state. Uncollected tax became the lessor's debt to California, which the state could pursue directly unless the purchaser-lessee had paid it directly to the state.

The letter nevertheless described the purchaser as primarily liable. If the lessor paid California under sections 6203 and 6204, the law implied a purchaser reimbursement duty under the cited Brandtjen & Kluge case. The concluding answer said stations had to pay the lessor unless they paid the state directly.

Counsel noted that the company had registered to collect tax effective October 16, 1969—three days after its request—and told purchasers to receive and retain receipts for tax paid to the lessor under former Ruling 76. The referenced Regulation 1685 and Ruling 76 copies are not included in the PDF, and no actual lease, collection, direct payment or later dispute outcome is supplied.

The live annotation publishes only the audio-tape exclusion sentence. It omits the video/audio distinction's constitutional treatment and every collection, debt, direct-payment, reimbursement, registration, receipt and source-limit fact.

Common questions

Were audio-only tapes exempt under the film-and-tape exclusion?

No. The opinion required video as well as audio for that historical exclusion.

Did counsel address whether the distinction was constitutional?

Yes, but only by saying the Board did not consider it unconstitutional; the letter supplies no analysis.

Who had to collect the tax?

The manufacturer-lessor, when it collected rent for tapes in California.

What happened if the lessor did not collect?

The amount was a debt owed by the lessor to California unless the purchaser-lessee had paid the state directly.

Could the radio station pay the state directly?

Yes. Otherwise it had to reimburse the lessor for tax the lessor paid.

If the lessor paid, could it seek reimbursement?

The opinion said purchaser primary liability implied a reimbursement obligation and cited Brandtjen & Kluge.

Did the lessor need California registration?

Yes under the source, which noted registration effective October 16, 1969.

What receipt instruction was given?

Purchasers were told to obtain and keep a receipt for tax paid to the lessor under Ruling 76.

Were Regulation 1685 and Ruling 76 supplied?

No. The letter says copies were enclosed, but they are absent from the published PDF.

Does the source show an actual collection outcome?

No. It gives a formal legal answer but supplies no lease, return, payment, receipt, enforcement action or later resolution.

Citations and references

• Revenue and Taxation Code sections 6203(c), 6203 and 6006.1 — manufacturer-lessor collection duty and timing
• Revenue and Taxation Code section 6204 — lessor debt for uncollected tax
• Revenue and Taxation Code section 6006(g)(1) — historical audiovisual-film/tape exclusion applied
• Regulation 1685 and former Ruling 76 — cited direct-payment and receipt rules; enclosures absent
• Brandtjen & Kluge v. Fincher, 44 Cal. App. 2d 939, 111 P.2d 979 — purchaser reimbursement authority cited; California reporter citation independently resolved
• October 13, 1969 requester letter — three questions described; standalone letter absent
• November 20, 1969 counsel letter — formal answer and October 16 registration fact; no later transaction or dispute outcome
• Official Annotation 330.1880 — publishes only the section 6006(g)(1) exclusion result

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.1880
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-1880.pdf
• Citation verification: Brandtjen & Kluge

Original ruling text

330.1880

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 20, 1969

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Gentlemen:
In reviewing your file, we understand that you are in the business of manufacturing and leasing special audio tapes to various radio stations throughout the country, including California. Because certain of your customers have resisted paying use tax to you, you request in your letter of October 13, 1969, that we make a formal ruling regarding: 1.

Your obligation as lessor to collect the tax.

2.

The radio station’s obligation to pay the tax to you

3.

Your compliance with the registration requirements with the State of California.

As a lessor manufacturer of tangible personal property, you are required to collect the California use tax on any rental receipts you receive while the property is in this state (§§ 6203(c) and 6006.1 of the Revenue and Taxation Code). This is to be collected when you collect your rental receipts (§ 6203). If the amount is not collected, it is a debt due and owing to the state (§ 6204). As a debt, the state may proceed directly against you for such tax unless it has been paid directly to the state by the purchaser-lessee (see Regulation 1685 and Ruling 76, copies enclosed). It should be noted that the primary liability for the tax is upon the purchaser. Consequently, when a retailer (lessor) pays an amount of tax to the state in satisfaction of the liability imposed under Sections 6204 and 6203, the tax implies an obligation on the part of the purchaser to reimburse the retailer for the amount so paid. Brandtjen & Kluge v. Fincher, 44 Cal.App.2d 939, 111 Pac.2d 979. We have taken the position that audio tapes are not within the exclusion provided in Section 6006(g)(1). The tapes mentioned therein are limited to television and motion picture films and tapes which are video as well as audio. We do not consider such a distinction as unconstitutional.

-2-

November 20, 1969
330.1880

Summarily, you are obligated to collect the tax as the lessor manufacturer of the tapes, and the lessees are obligated to pay you the tax unless they pay it directly to the state. We note that you are registered to collect the tax as of October 16, 1969. Note – the purchasers should receive and retain a receipt for the payment of such tax paid to you per Ruling 76. Very truly yours,

Glenn L. Rigby
Tax Counsel

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Enclosures
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