Could a trailer lessor receive California's section 6388.5 exemption based on the lessee's qualifying use?

Plain-English summary

District staff asked whether a section 6388.5 exemption available for qualifying trailer sales to truckers could also apply when the purchaser was a lessor.

California said trailers were mobile transportation equipment, making the lessor their consumer. Because the lessor consumed a trailer by leasing it, the lessee's manner of use was attributed to the lessor for purposes of the exemption.

If the lessee used the trailer in the qualifying manner, the lessor received the exemption. The required affidavit had to come from the lessor, which bore the stated burden of having issued an incorrect certificate if actual use did not match the certificate supplied to the vendor.

Unstated exemption conditions and missing records

The January memorandum confirms a November 27 conversation and responds to a December 4 Fresno District memorandum. Neither prior communication is included. The source says sales to truckers would qualify under section 6388.5 “under certain circumstances,” but it does not identify those circumstances or reproduce the affidavit and certificate requirements.

No retailer, purchaser, lessor, lessee, trailer, sale, delivery, lease, route, actual-use evidence, affidavit, exemption certificate, return, assessment, payment, or tax amount appears. The response therefore states how qualifying use would be attributed and who should provide the affidavit, but does not establish that a completed transaction met section 6388.5.

The memorandum's final sentence says the lessor bears the burden of having issued “and incorrect exemption certificate,” an apparent source typo preserved below. It does not quantify that burden or state a completed assessment, so this page does not supply a penalty or dollar consequence.

The live 335.0083 annotation preserves MTE status, lessor-consumer treatment, attributed lessee use, and the conditional exemption. It omits the oral and written request history, unspecified qualifying circumstances, affidavit requirement, incorrect-certificate warning, and absent records.

Common questions

Did lessor-consumer status prevent the exemption?

No. The memorandum tested the attributed lessee use.

Who had to provide the section 6388.5 affidavit?

The lessor.

Did the memorandum show that a particular trailer sale qualified?

No. The qualifying circumstances, trailer and transaction records, use evidence, affidavit, and certificate are absent.

Citations and references

• California Revenue and Taxation Code sections 6006(g)(4), 6023, and 6388.5
• California Sales and Use Tax Regulation 1661
• November 27, 1991 conversation and December 4 Fresno District memorandum — referenced but not included
• Trailer sale, lease, use, affidavit, exemption-certificate, return, and tax records — not included

Verbatim support

From the official January 21, 1992 memorandum:

If the trailer is used by the lessee in a manner qualifying for the section 6388.5 exemption, then the consumer of that trailer, the lessor, obtains the benefit of the exemption.

The affidavit required under section 6388.5 should be obtained from the lessor.

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/335-0083.pdf

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum

To:

Mr. Charles Tavookjian
Fresno District Office

From:

David H. Levine

Subject:

Section 6388.5

335.0083
Date:

January 21, 1992

(916) 445-5550
ATSS 485-5550

This is in response to your memorandum dated December 4, 1991, in which you ask for written confirmation of our conversation of November 27, 1991. You inquired regarding a retailer who sells trailers to truckers and lessors. When the trailers are sold to truckers under certain circumstances, the sale would be exempt under section 6388.5. You ask whether the same exemption would apply to sales of the trailers to lessors. Since a trailer is mobile transporation equipment under section 6023, the lease of that trailer is never regarded as a sale. (Rev. & Tax. Code § 6006(g)(4).) That is, the lessor of the trailer is always regarded as the consumer of that trailer. For purposes of the section 6388.5 exemption, the use of the trailer determines whether the exemption applies. Since the lessor consumes the trailer by leasing it to the lessee, the manner in which the trailer is used by the lessee is regarded as the lessor’s use for purposes of section 6388.5. If the trailer is used by the lessee in a manner qualifying for the section 6388.5 exemption, then the consumer of that trailer, the lessor, obtains the benefit of the exemption. The affidavit required under section 6388.5 should be obtained from the lessor. If the trailer is not used in the manner specified in the exemption certificate provided to the vendor, then the lessor bears the burden of having issued and incorrect exemption certificate. If you have further questions, feel free to write again.

DHL:cl
0563E