Was equipment used at a customer's premises leased when the service provider retained all possession and control?

Plain-English summary

May 16 letter confirmed oral opinion given at May 5 conference after reviewing same-day requester letter and attached contracts. None reproduced.

Contracts provided odds/payoff information and were phrased as services. Possession, custody and license to use equipment remained entirely with provider, its employees or electronic engineers. On those facts service was nontaxable, not equipment lease.

Provider was consumer of all tangible property purchased for use and used in California fulfilling service contracts; use tax applied/payable by company. No equipment/purchase/use/payment proof appears.

Live 330.2660 adds that property may be delivered to and used at customer premises while owner/personnel retain possession/custody/license. PDF itself does not state location. Live omits specific information service, contract/oral-opinion chain and provider acquisition-use tax.

Common questions

Did customer-premises equipment automatically make lease?

No under live annotation if possession/custody/license stayed owner/personnel; PDF does not state customer-site fact.

What did customer buy?

The contracts provided information about odds and payoffs, and were phrased as service contracts.

Who bore tax on equipment?

The provider was the consumer and owed use tax on tangible property purchased for use in California to perform the service.

Were attached contracts available?

No. Letter says reviewed them, but official PDF contains only counsel's description/conclusion.

Was oral opinion record available?

No. Letter confirms same-day oral opinion but gives no participants or separate record.

Did letter cite any law?

No statute, regulation, ruling or case appears.

May another information provider rely on result?

No. It is historical contract-specific advice without contracts or transaction proof; actual control, equipment use and current law must be checked.

Citations and references

• No statute, regulation, ruling or case — cited
• May 5 letter/conference and attached contracts — absent
• Equipment/control/acquisition/use/tax records — absent
• Official Annotation 330.2660 — adds customer-premises fact but omits service/tax context

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2660
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2660.pdf

Original ruling text

330.2660

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

May 16, 1966

This is in reply to your letter of May 5, 1966, and confirms the oral opinion given to you at our conference on the same date. We have reviewed your letter and the contracts attached. In our opinion, they are service contracts as distinguished from lease contracts. The service of providing the information on odds, pay offs, etc., is considered to be a nontaxable service in view of the fact that the possession, custody, and license to use the equipment remains totally in the hands of ---, its employees, or electronic engineers. The contracts are phrased in terms of the rendition of services. It follows that the company will be considered to be the consumer of all of the tangible personal property purchased for use and used in this state in fulfilling its service contracts, with use tax applicable to such property and payable by the company.

Very truly yours,

E. H. Stetson
Tax Counsel

EHS :fb

cc:

Out of state - District Administrator
New York - District Administrator