Could a lessor reverse its decision to pay tax when vehicles were acquired and instead report tax on the rental receipts?

Plain-English summary

W--- W--- L--- Corporation paid tax when purchasing vehicles later leased in substantially the same form. It then reported tax on rent for the first rental period and claimed a tax-paid-purchases-resold deduction, seeking a refund of the acquisition tax.

The Petition Unit relied on a January 2-8, 1969 legal digest and a January 7 L. A. Augusta letter. The quoted rule said purchase-price tax at acquisition irrevocably elected not to tax rent for same-form property. A later return reporting rental tax and claiming the deduction could not switch methods.

The May 13 memorandum says a March 12 letter had presented denial to the Board at its May 6 meeting, the Board accepted the recommendation and denied the claim. Because Inglewood audit staff verified that W--- collected tax from customers, the Petition Unit directed collection of the reported amount under historical Ruling 80.

On May 20, 1996, Gary Jugum reviewed the Petition Unit document as a Non-Attorney Opinion and agreed with its quoted conclusion. That review does not reproduce or discuss the transaction/claim evidence.

The page uses the later Legal Division confirmation as issued_date while preserving both official dates. No underlying source, ruling text, records, collected amount or post-direction outcome is supplied; the live annotation publishes only the irrevocable-election proposition.

Common questions

Could the lessor switch from cost tax to rental tax?

No. The source called the acquisition-tax election irrevocable.

Could a resale deduction undo the earlier choice?

No. Reporting rental tax and claiming a tax-paid-purchases-resold deduction did not reverse the election.

Was the refund claim actually denied?

The May 13 memorandum reports that the Board accepted the recommendation at its May 6 meeting and denied it, but no formal Board record is supplied.

Why did staff seek the amount collected from customers?

The audit staff had verified that the taxpayer collected that tax, and the memorandum applied historical Ruling 80.

How much customer tax was collected?

The source does not say; the referenced return and prior letter are absent.

What did the 1996 review do?

Legal Division reviewed the 1969 Petition Unit Non-Attorney Opinion and expressly agreed with its conclusion.

Citations and references

• January 2-8 legal digest and January 7, 1969 Augusta letter — quoted/described but absent
• April 23 audit memo, March 12 taxpayer letter and May 6 Board action — described but absent
• Board Ruling 80 — cited for collection but complete text/history absent
• Vehicle/acquisition/lease/return/collection/refund records — absent
• May 13, 1969 Petition Unit memorandum — reports denial and directs collection
• May 20, 1996 Legal Division memorandum — agrees with the 1969 Non-Attorney Opinion
• Official Annotation 330.2179 — dual-dated rule without claim/collection/source branches

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2179
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2179.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Inglewood – Auditing

From:

Petition Unit - Headquarters

Subject:

W--- W--- L--- Corporation
XXXX --- --- -----, California XXXXX

330.2179

Date:

May 13, 1969

SR -- XX-XXXXXX

Please refer to your memorandum of April 23. We do not agree that the tax paid by the taxpayer on the vehicles when purchased should be refunded. Please refer to the legal digest of January 2 to January 8, 1969. A letter written January 7 by L. A. Augusta, states that in the case of property ultimately leased in substantially the same form as acquired, payment of tax measured by the purchase price at the time the property is acquired constitutes an irrevocable election not to pay tax measured by the rental receipts. The lessor may not change his election by reporting tax on rental receipts on his return for the period the property is first placed in rental and claiming a tax paid purchases resold deduction. Our recommendation of denial was presented to the Board at their May 6 meeting as stated in our letter of March 12 to the taxpayer copy of which was furnished to you. The Board has accepted our recommendation and denied the claim for refund. Collection procedures should be initiated on the amount reported on the return as shown in our letter, as you have verified that the taxpayer has collected the tax from his customers. This would be in accordance with Ruling 80.

MGR:sl

State of California

Board of Equalization

Memorandum

To:

Mr. Glenn Bystrom

From:

Gary Jugum

Subject:

Non-Attorney Opinions

330.2179

Date:

May 20, 1996

I have reviewed Petition Unit – Headquarters’ memorandum of May 13, 1969 to Inglewood – Audit. We are in agreement with his conclusion, as follows: Election to Report on Cost. For property leased in substantially the same form as acquired, payment of tax measured by the purchase price at the time the property is acquired, constitutes and irrevocable election not to pay tax measured by the rental receipts. The lessor may not change his election by reporting tax on rental receipts on his return for the period the property is first placed in rental and claiming a tax paid purchases resold deduction. 5/13/69.