Was a charge for returning a rented car somewhere other than its pickup location included in the taxable rental price?

Plain-English summary

San Mateo Auditing asked headquarters Tax Counsel about a redacted automobile lessor's “drop-off” charge. The December 15, 1967 referral, lease and transaction records are absent. The January 8, 1968 answer is an internal memorandum, not a taxpayer-specific ruling or final audit result.

As Tax Counsel understood the facts, the lessor left the lease's price segment blank when the lessee picked up a car. At that time, however, the lessee was told one price would apply for return to the rental location and another for choosing a drop-off station.

The total could not be calculated until the car came back. The lessee knew the particular vehicle carried stipulated daily mileage and insurance charges and that return location changed its price. At return, those factors produced one total rental price for that vehicle.

Tax Counsel therefore included the drop-off charge in taxable sales price under Revenue and Taxation Code section 6011. No actual price, mileage, insurance amount, return route, invoice, reported tax, audit adjustment or later outcome appears.

The live annotation publishes the same bottom-line result but dates it January 10, 1968, two days after the supporting memorandum. This page follows the document body's January 8 date and leaves the conflict unresolved. The original text also visibly prints aoutomobile and seciton; those source defects remain verbatim.

Common questions

Did the blank total-price field make the drop-off fee separate from rent?

No. The alternative same-location and drop-off prices were disclosed even though the total depended on what happened later.

Was return location part of the same lease pricing?

Yes. The source says the total rental price for the particular vehicle combined all pricing factors at return.

Was the drop-off charge taxable?

Yes, as part of the total rental price.

Does the source state the amount of the drop-off fee?

No. It describes the pricing method but gives no actual rate, fee or total.

Which date does this page use?

January 8, 1968, the date printed on the memorandum. The live annotation's January 10 date is disclosed but not substituted.

Does the memorandum show a completed audit or taxpayer outcome?

No. It answers an internal referral and supplies no lease, invoice, assessment, payment, refund, appeal or final action.

Citations and references

• Cal. Rev. & Tax. Code § 6011 — sales-price definition applied to the drop-off charge
• Live Annotation 330.3180 — same holding with a January 10 date that conflicts with the January 8 memorandum
• December 15 referral and every agreement, price, return, tax and outcome record — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.3180
• Original supporting memorandum: 330.3180 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Mateo – Auditing (CFL)

From:

Tax Counsel (TPP:AWP) - Headquarters

Subject:

B--- R--- Corporation of
California and W--- W--dba B--- R--- of San Jose
XXX --- Avenue
--- ---, CA XXXXX

330.3180

January 8, 1968

SR -- XX-XXXXXX

In your memorandum of December 15, 1967, you ask whether a “drop-off” charge made by an aoutomobile lessor is includible in the sales price subject to tax. The facts, as we understand them, are that the lessor leaves the price segment of the lease agreement blank when the lessee picks up the car. The lessee is told at the time that the rental price will be one amount if he returns the car to the location from which it was rented, and another amount if the lessee chooses to leave the car at a “drop-off” station. At the time the contract is executed, there is certainty regarding all aspects except the total sale price. The sale price is impossible to compute until the car is returned. However, the lessee knows that regarding the lease of that particular vehicle, there will be stipulated daily mileage and insurance charges; and, in addition, the price for renting that particular vehicle will vary, depending upon the location to which the vehicle is returned. When the car is returned by the lessee all these factors are considered and a total rental price for that particular vehicle is computed. Based upon this reasoning, the “drop-off charge” is includible in the sale price, subject to tax as defined in seciton 6011.

AWP:ph
cc:

San Jose – District Administrator