Could a separately stated automobile-insurance charge be excluded from taxable rent?

Plain-English summary

This is an internal-looking editorial letter to an unidentified “Dr.,” not an opinion on a supplied lease. It quotes the rule of former Annotation 1536.15 from California Tax Service page 3492.2, dated December 8, 1965.

That historical rule addressed a lessee required by an automobile lease to obtain insurance for the lessee's own benefit. If the lessor sold the insurance for an additional separately stated charge, the amount was excluded from taxable rent only when the lessee could instead buy from an insurer of its own choice.

The letter found that rule inconsistent with former Annotation 1722.70, “Insurance Premiums,” on California Tax Service page 3538, dated June 15, 1960. It declared the older annotation superseded and directed deletion. Neither underlying staff opinion is included, so their facts and scope cannot be compared.

No request, taxpayer, vehicle, lease, insurance policy, beneficiary evidence, premium, bill, reported tax, audit or later outcome appears. Live Annotation 330.3360 restates the adopted rule but not the editorial history or evidence gap.

The PDF visibly prints purchase the insurance from, the lessor and may purchase ix from an insurer. Those defects remain in the source text; ix is not used as a factual term here.

Common questions

Did the insurance itself have to be optional?

The quoted rule required coverage but allowed the lessee to choose an insurer other than the lessor.

Why did separate statement matter?

The quoted rule expressly required an additional, separately stated insurance charge.

Did the letter preserve the older contrary guidance?

No. It declared 1722.70 inconsistent and superseded and directed its deletion.

Did this letter review an actual insurance policy or lease?

No. It states no transaction and reproduces neither document.

Can the two historical annotations be compared?

Only their labels, dates and the later letter's characterization are available here; both underlying opinions are absent.

Does the live annotation add transaction facts?

No. It restates the selected insurance rule without identifying a taxpayer, contract, charge or outcome.

Citations and references

• Former Annotation 1536.15, dated December 8, 1965, supplied the insurance-charge rule adopted in the letter.
• Former Annotation 1722.70, dated June 15, 1960, was declared superseded and slated for deletion.
• Live Annotation 330.3360 — same adopted insurance-charge rule
• Request and every taxpayer, lease, policy, charge, invoice, underlying opinion, tax and outcome record — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.3360
• Original editorial letter: 330.3360 PDF

Original ruling text

330.3360

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

July 13, 1966

Dear Dr.
Annotation number 1536.15, page 3492.2, Insurance, 12-8-65, provides that when the lessee of an automobile is required under the contract to obtain automobile insurance for his own benefit, and the lessor sells such insurance to the lessee making a separately-stated charge therefor, the charge for the insurance is excludible from the lessor's taxable rental receipts if the lessee is not required to purchase the insurance from, the lessor, but may purchase ix from an insurer of his own choice. Since the foregoing is inconsistent with California Tax Service, page 3538, Rental of Property Purchased for Resale, annotation number 1722.70, Insurance Premiums, 6-15-60, the latter is superseded and should be deleted.

Very truly yours,

George A. Trigueros
Associate Tax Counsel

Bcc:

Mr. Richard Ochsner
Forms Management
Mrs. Grace Goertz