Must a California lessor collect use tax on rent when it has only one lease contract and no sales or use tax was paid on the property?

Plain-English summary

A redacted CPA and attorney's absent February 1, 1993 request concerned a retailer-lessor with only one lease contract. Assistant Chief Counsel answered in one substantive paragraph without identifying the property, parties, agreement or payments.

When neither sales-tax reimbursement nor use tax had been paid on the tangible personal property, its lease was a continuing sale. The lessor therefore had to collect use tax from the lessee despite entering only one lease.

The PDF cites no numbered statute, regulation, ruling or case. Live Annotation 330.3749 reproduces the same rule and date but adds no underlying facts or authority. No request, property, acquisition or tax proof, lease, rent, collection/remittance, return, audit or later outcome appears.

Common questions

Does use tax apply only when a lessor has multiple customers or lease contracts?

No. The letter expressly applied the continuing-sale rule to a lessor with only one lease contract.

What acquisition fact mattered?

Neither sales-tax reimbursement nor use tax had been paid on the leased property.

Who collected the tax?

The lessor collected it from the lessee.

Did the letter identify the property or lease terms?

No. It states only the general tangible-personal-property rule.

Did either official source cite a statute or regulation?

No. Both state the result without a numbered authority.

Was actual tax collection or a later outcome shown?

No. The source contains advice only.

Citations and references

• No numbered statute, regulation, ruling or case appears in the PDF
• February 1, 1993 request — single-lease issue, referenced but absent
• Live Annotation 330.3749 — same continuing-sale and collection rule dated February 9, 1993
• Property, acquisition-tax proof, lease, rent, collection, return, audit and later outcome — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.3749
• Original supporting opinion: 330.3749 PDF

Original ruling text

330.3749

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001) (916) 445-3723

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

February 9, 1993

GRAY DAVIS
Controller, Sacramento
────────
BURTON W. OLIVER
Executive Director

Mr. C--- L. N---, C.P.A.
Attorney and Counselor at Law
XXXX --- --- East, --- Floor
--- ---, CA XXXXX
Dear Mr. N---:
This is in response to your letter of February 1, 1993. A retailer who is a lessor of tangible personal property as to which neither sales tax reimbursement nor use tax has been paid is making a continuing sale of that property and must collect use tax from the lessee, notwithstanding the fact that the lessor may have entered into but one lease contract. Very truly yours,

Gary J. Jugum
Assistant Chief Counsel
GJJ:sr