Did permanently mounted concrete pumps become mobile transportation equipment with their trucks?

Plain-English summary

A manufacturer argued that truck-mounted concrete pumps were not MTE because the trucks mainly supported pumping equipment, required drive-shaft modifications, usually traveled 50 miles or less between jobs, and were used mostly off road.

California agreed that a pump by itself was not transportation equipment but held that it became MTE as a component part of the truck. The pumps were permanently attached and stayed on the trucks while operating, and trucks were expressly included in the statutory MTE definition.

The trucks could travel at highway speed and some had crossed the United States. A different agency's classification as nonhighway vehicles did not bind the Board. The hearing officer recommended no adjustment on six disputed transactions because delivery, certificate or resale evidence did not support relief. One vehicle-exemption claim remained open to review if the petitioner supplied the required evidence.

Audit and recommendation

Hearing Officer Susan M. Wengel heard T--- E--- Co.'s petition on February 13, 1990 in Torrance and issued the recommendation on August 15. The corporation began California manufacturing in January 1983 and was a subsidiary of redacted P--- W---. This was its first audit; no penalties were assessed.

The disallowed-exemption item was based on an actual examination of invoices over $10,000 and had a $2,975,354 State, Local and County measure, of which the petitioner disputed $1,276,479. Those figures are not tax amounts. The first page prints the period as January 1, 1983 through “December 31, 195.” Visual review confirms that incomplete year; it is not silently changed to a plausible four-digit year.

The following outcomes are from pages 3–7 of the official recommendation. The invoices and related exhibits are discussed or quoted but are not included in the published PDF.

Invoice 6338's described invoice price is $214,400, while the quoted June 18 proposal says $214,000, ten monthly payments of $6,500 and conversion to a sale. Neither figure is reconciled with the $182,240 heading measure. Invoice 5600's heading says $259,238.72, but its body says $259,238.12. Invoice 7004 is dated August 7 although the reported pickup occurred July 31. The source does not resolve these differences; the measures are not reverse-calculated into missing values.

For the last transaction, the quoted historical section 6388 required specified qualifying vehicle characteristics, purchase from an out-of-state dealer for out-of-state use, manufacturer delivery in California and removal within 30 days. The requested documentation included out-of-state registration, a nonresident purchaser's affidavit identifying the out-of-state purchase for out-of-state use, and an affidavit of timely removal. The decision did not find that these documents had been provided.

Source coverage and reliance

The source reasons by analogy to prior Board treatment of generators permanently attached to trailers, but does not identify or attach those decisions. It cites section 6296, as printed, for resale-certificate protection; that citation is not silently replaced with a different number. Exhibits A through I, including C-1 and C-2, are listed at the end but absent from the seven-page publication. There is no later Board adoption, redetermination, payment or outcome for the invited additional evidence.

The live annotation covers only classification and highway capability. It omits the six transaction analyses, evidence gaps and procedural limits. The published recommendation should therefore be read as more than a general statement that concrete-pump trucks are MTE.

Common questions

Did pumping rather than transportation as the main business purpose control classification?

No. Permanent component status on statutory truck MTE controlled the stated result.

Did limited typical trip distance change the outcome?

No. The source also found the trucks highway-capable and sometimes used cross-country.

Were the quoted multimillion-dollar figures tax bills?

No. They were the sales measures used to compute tax. The source does not provide the resulting tax dollars.

Did shipment out of California automatically exempt a sale?

No. The recommendation examined who took delivery in California, the shipping contract, prior use and the particular exemption's evidence requirements.

Was every exemption claim finally foreclosed?

The recommendation was no adjustment on the record presented, but the hearing officer invited the missing section 6388 evidence for invoice 8826.

Citations and references

• California Revenue and Taxation Code section 6023 — truck components as MTE
• Sections 6007 and 6388 — California delivery and vehicle-exemption analysis
• Section 6296, as printed — resale-certificate discussion
• Regulations 1620(a)(3)(A) and 1668(b)(1)(c) — delivery and certificate requirements
• Referenced prior generator classifications and Exhibits A–I — not separately supplied

Verbatim support

From the official recommendation:

No penalties were assessed.

If petitioner can obtain the necessary evidence, it may be submitted to this hearing officer for review.

It is recommended that the liability be redetermined without adjustment.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/335-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/335-0012.pdf

Original ruling text

STATE OF CALIFORNIA

335.0012

BOARD OF EQUALIZATION
APPEALS UNIT
In the Matter of the Petition
for Redetermination Under the
Sales and Use Tax Law of:
T--- E--- CO.
D--Petitioner

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HEARING
DECISION AND RECOMMENDATION

No. SR -- XX XXXXXX-010

The above-referenced matter came on regularly for hearing before Hearing Officer, Susan M. Wengel on February 13, 1990 in Torrance, California. Appearing for Petitioner:

W--- M. S--Attorney
A--- E--Controller
B--- L--Regional Manager

Appearing for the Department
of Business Taxes:

Kent L. McLellan
Senior Tax Auditor
Richard Hess
Supervising Tax Auditor
Protested Item

The protested tax liability for the period January 1, 1983 through December 31, 195 is measured by:

(B)

Item

State, Local
and County

Claimed exempt sales disallowed
per an actual basis examination of
invoices over $10,000.

$2,975,354

(Petitioner disagrees with only
$1,276,479 of the total measure.)

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

Contentions of Petitioner
1.
The sales of trucks with concrete pumping equipment are not sales of mobile transportation equipment. 2.

Several sales for resale were improperly disallowed.
Summary of Petition

Petitioner is a corporation which began business in California manufacturing trailer and truck mounted concrete pumping equipment in January 1983. It is a subsidiary of P--- W---, the parent corporation. During the first audit of petitioner’s records the Department of Business Taxes (Department) established that the equipment sold by petitioner was mobile transportation equipment and disallowed many of the sales claimed by petitioner to be exempt sales for resale. Petitioner initially contends that the pumping equipment should not be classified as mobile transportation equipment (MTE). In the alternative, petitioner asserts that the sales should be exempt as sales for resale or sales in interstate commerce. The details of each transaction and petitioner’s position as to each sale are detailed below. No penalties were assessed. Analysis and Conclusions The first issue is whether the cement pumping equipment has been properly classified as mobile transportation equipment. This issue is important because petitioner has mad numerous sales to businesses which lease the equipment. If the equipment is MTE, then the leasing is a use by the lessor and consequently the sale by petitioner to the leasing company cannot be a sale for resale. Petitioner contends that the concrete pumps (see Exhibit A attached) are not MTE because transportation is not the principal purpose for the trucks. Rather, the trucks are to support the pumping equipment. Petitioner further asserts that the equipment is used predominantly off the road and usually travels 50 miles or less between jobs. The truck has to be modified to carry the pumping device and the drive shaft has to be replaced with a specialized drive shaft that will operate the pumping equipment as well as the truck. In sum, petitioner’s position is that the equipment is not designed for long distance transportation of persons or property at highway speeds. We cannot agree. In relevant part, Revenue and Taxation Code Section 6023 defines the term “mobile transportation equipment” to include busses, trucks… and tangible personal property which is or becomes a component part of such equipment.” The concrete pumps are not in themselves transportation equipment. They can, however, be classified as MTE if they are or become a “component part” of the trucks upon which they are carried.

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

In previous decisions, the Board has determined that mobile generators designed to be installed and actually installed on trailers are MTE. The rationale is that the generators are permanently attached to the trailers and remain on the trailers at all times, even when being used. The generators are, therefore, component parts of the trailers. The same rationale applies to the concrete pumps in this appeal. The pumps are permanently attached to the trucks and remain on the trucks when in use. Trucks are by statute defined as MTE so quite clearly once the pump is attached to the truck and becomes a component part of that truck, it becomes MTE. In the present case, the trucks were capable of traveling at highway speed and were, in some cases, driven across the United States. The classification of equipment by any other agency as non-highway vehicles reflects only the opinion of that particular agency and therefore is not binding on this Board. The second issues involves several sales which have been claimed by petitioner as sales in interstate commerce or sales for resale. For purposes of clarification, each sale will be addressed individually. (1)

Invoice #6338 dated June 28, 1985 to B--- C--- S---, Inc. ($182,240)

Invoice #6338 dated June 28, 1985 indicates that a sale of a pumping truck was made to B--- C--- S---, Inc. for $214,400.00. The invoice states that pick up was to be by the customer. (See Exhibit B). In a letter to petitioner, dated June 18, 1985 just 10 days prior to the abovereferenced invoice, a J--- B--- of B--- C--- S---, Inc. wrote the following letter to petitioner: “At this time, we would like to commit to an order of one (1) Thomsen Model 32-12 Concrete Pump on a ten month lease purchase agreement for $6,500 per month. At the end of the ten month period, it is understood that all monies paid toward the leasing of the machine will be applied to the purchase price of
$214,000.00. At the end of ten months the lease will be converted to a sale… We would also like for you to arrange for a drive away service as to insure safe delivery.” A copy of a delivery ticket to R--- D--- A--- from petitioner dated June 29, 1985 indicates that R--- D--- A---y was to pick up the equipment at petitioner’s premises and then drive the equipment to B--- C--- S---, Inc. which is located in [city], New York. (See Exhibit C-1). An address for delivery is not specified, however, it is assumed that because the purchaser was concerned about a safe delivery that the equipment was driven to New York. This is confirmed by B--- C--- S---, Inc. when it responded to a Departmental inquiry. In this response, B--- C--noted that it purchased the equipment for leasing and that “sales tax from rentals are paid to New York State where the equipment is located.” (See Exhibit C-2)

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

The Department has taken the position that because the sales invoice indicates that the customer will pick up the equipment and because there is a delivery ticket that indicates that shipment is to be “W/C” or “will call”, that delivery to B--- C--- S---, Inc. took place when R--D--- A--- took possession of the equipment in California on behalf of B--- C--- S---, Inc. We agree. Sales and Use Tax Regulation 1620(a)(3)(A) provides that sales tax applies when the property is delivered to the purchaser or the purchaser’s representative in this state, whether or not the disclosed or undisclosed intention of the purchaser is to transport the property to a point outside this state, and whether or not the property is actually so transported. B--- C--- S---, Inc. contracted to pick up the equipment in California and did actually receive the equipment in California via their agent, R--- D--- A---. A sale with delivery in this state took place and tax was properly assessed. The sale could not have been an exempt sale unless the property, pursuant to a contract of sale, was required to be shipped and was so shipped to a point outside this state by the retailer by means of facilities operated by the retailer or by delivery by the retailer to a carrier, customs broker or forwarding agent for shipment to such out-of-state point. As there is no evidence that R--- D--- A--- is a common carrier or that the contract between petitioner and B--- C--- S---, Inc. required petitioner to have the property shipped to an out-ofstate location. Furthermore, there is no evidence that the property was resold by B--- C--- S---, Inc. without any prior use. No adjustment can be recommended. (2)

Invoice #5600 dated May 15, 1985 to G--Equipment leasing. ($259,238.72)

Invoice #5600 dated May 15, 1985 indicates that a sale totaling $259,238.12 was made to G--- Equipment Leasing. (See Exhibit D). The equipment was picked up by G--- in California. (See Exhibit E). No sales tax reimbursement was collected. G--- at that time had on file with petitioner a resale certificate which listed a false California seller’s permit number. (See Exhibit F). A check of valid permit numbers for G--- indicated that they do not hold a California seller’s permit. When the resale certificate held by petitioner was completed, G--- merely used their Massachusetts permit number. Revenue and Taxation Code Section 6296 provides in relevant part that a resale certificate relieves a seller from liability for sales tax only if taken in good faith from a person who holds a California seller’s permit. Sales and Use Tax Regulation 1668(b)(1)(c) requires a seller’s permit number to be held by the purchaser unless the purchaser makes no sales in California and an appropriate notation to that effect is made on the resale certificate in lieu of the seller’s permit number. There was no such notation on the certificate and there is no evidence that G--- was a purchaser who made no other sales in California. As G--- Equipment Leasing did not hold a valid seller’s permit, petitioner remains liable for the tax unless it can be shown that the equipment was in fact resold without any prior use. In a letter dated February 27, 1987, A--G--- stated that G--- Equipment Leasing, Inc. is an authorized distributor of T--- E--- and that the equipment in question was purchased with the intent to resell it. He does not, however, state that the equipment was, in fact, resold prior to any use. Given the fact that G--- is a leasing company, a sale without prior use cannot be assumed. As petitioner has failed to show that the equipment was resold prior to any use, no adjustment can be recommended.

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

We note that in a subsequent audit a sale to G--- has been accepted as an exempt sale. The facts surrounding this transaction, however, differ from the present situation. In the subsequent audit the equipment was delivered to G--- out-of-state by an agent of petitioner. (3)

Invoice #3875 dated January 31, 1985 to
L--- S--- Corp. ($260,000)

Petitioner’s sole argument as to this item is that the equipment is not mobile transportation equipment. As this issue has already been determined and the finding is adverse to petitioner’s position, no adjustment can be recommended. (4)

Invoice #7004 dated August 7, 1985 to E--T--- C--- P---.

A sale of a pump truck was made to E--- T--- C--- P---. The invoice indicates that E--T--- was to pick up the equipment. (See Exhibit G). E--- T--- did in fact authorize M--- K--- to take delivery of the equipment (see Exhibit H) which he did on July 31, 1985. (See Exhibit I). As delivery was in California and because E--- T--- leased the equipment and did not resell it, the Department considered the sale to be a California sale to a consumer. We agree. There are letters from E--- T--- that indicate the equipment should have been sold to A--C--- P--- E---, which in turn would have resold it to E--- T--- for leasing purposes. The sale was not to A---, however, and cannot qualify as a sale for resale. Other letters from E--- T--- that were written after the tax was assessed are self-serving. There is no evidence that the equipment was resold prior to any use by E--- T---. We note that in the subsequent audit a sale to E--- T--- was allowed because the auditor thought E--- T--- was the same company as A---, which is a dealer of petitioner’s equipment. The auditor did not realize that E--- T--- C--- P--- is a separate entity. A subsequent error in petitioner’s favor is not binding as to the findings of this petition. No adjustment can be recommended. (5)

Invoice #458 dated July 26, 1984 to P--S--- Co. ($102,252)

In July of 1984 petitioner sold a boom to P---’ S--- Company of Oklahoma City. A truck was brought to California from Oklahoma so that the boom could be attached. The equipment was apparently resold to S--- C--- P--- who hired an independent truck driver to pick up the equipment from petitioner and deliver it to S--- C--- P--- in Oklahoma. The Department confirmed these facts by an XYZ letter from S--- C--- P--- and a subsequent telephone discussion with its president.

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

The Department considered the sale to be taxable as a Revenue and Taxation Code Section 6007 transaction as a California permittee made delivery to a consumer in California at the request of an out-of-state non-permitized retailer. We agree. Revenue and Taxation Code Section 6007 provides: “A ‘retail sale’ or ‘sale at retail’ means a sale for any purpose other than resale in the regular course of business in the form of tangible personal property. The delivery in this State of tangible personal property by an owner or former owner thereof or by a factor, if the delivery is to consumer or person for redelivery to a consumer, pursuant to retail sale made by a retailer not engaged in business in this State, is a retail sale in this State by the person making the delivery. He shall include the retail selling price of the property in his gross receipts.”

When delivery was made to the agent of Sooner Concrete Pumping in California, a taxable sale occurred. No adjustment is recommended. 6)

Invoice #8826 dated November 21, 1985 to
H---, Inc. ($145,000)

A pump truck was sold to H---, Inc. which is an out-of-state distributor of this type of vehicle. Delivery was made to H---, Inc. in California, through its agent Mr. B--- T--- of A--E--- and S--- C---. The unit was driven back to [city], Kansas where it was allegedly sold to D--C--- C---. Revenue and Taxation Code Section 6388 provides: “Where a new or remanufactured truck, truck tractor, semitrailer, or trailer, any of which has an unladen weight of 6,000 pounds or more, or a new or remanufactured trailer coach or a new or remanufactured auxiliary dolly, is purchased from a dealer located outside this State for use without this state and is delivered by the manufacturer or remanufacturer to the purchaser within this state, and the purchaser drives or moves the vehicle from the manufacturer’s or remanufacturer’s place of business in this state to any point outside this state within 30 days from and after the date of the delivery, there are exempted fro the taxes imposed by this part the gross receipts from the sale of and the storage, use or other consumption of the vehicle within the state, if the purchaser furnishes the following to the manufacturer or remanufacturer: (a)

Written evidence of an out-of-state registration for the vehicle.

T--- E--- CO. D--SR -- XX XXXXXX-010

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August 15, 1990
335.0012

(b)
The purchaser’s affidavit attesting that he or she is not a resident of California and that he or she purchased the vehicle from a dealer at a specified location without the state for use outside this state. (c) The purchaser’s affidavit that the vehicle has been moved or driven to a point outside this state within 30 days of the date of the delivery of the vehicle to him or her. The Department has noted that this statute appears to be applicable to the present situation, however, petitioner has not presented the evidence required. As no evidence has been presented, no adjustment can be recommended. If petitioner can obtain the necessary evidence, it may be submitted to this hearing officer for review. Recommendation It is recommended that the liability be redetermined without adjustment.

________
Susan M. Wengel, Hearing Officer

W/Exhibits A, B, C-1, C-2, D, E, F, G, H and I

August 15, 1990
________
Date