Does one estate auction count as one sale, or does each auction lot count separately when deciding whether a public administrator is a retailer?

Plain-English summary

A public administrator believed that holding no more than three auctions for one estate in 12 months avoided retailer status. The letter explained that the count turned on sales, not auction events.

One item sold to one bidder is one sale. A bundled lot of several items sold in one bid is also one sale. But a typical auction contains many separate sales: each time the hammer drops, another sale occurs, even if the same bidder wins several lots.

If the administrator makes more than two substantial sales for one estate during a 12-month period, sales tax applies and a seller's permit is required, even when every sale occurs at one auction.

Per-estate threshold, live-page conflict, and source limits

Tax Counsel James A. Davis answered a referred written-opinion request from S--- C--- P--- A--- through Mr. S--- S---. The source says the administrator held no more than three auctions within twelve months while administering any one estate and relied on an October 24, 1952 sales-tax counsel opinion.

Davis identified the earlier opinion as Business Tax Law Guide Annotation 395.0960. As quoted, it treated public administrators like executors and administrators: one or two sales during a particular estate's administration were not taxable regardless of how many estates the public administrator handled, while three or more substantial sales in twelve months for one estate were taxable.

Regulation 1573, quoted from a copy said to be enclosed, treated a court officer—including a sheriff, commissioner, assignee for creditors, executor, administrator or bank—as retailer for a sale when the officer made three or more substantial sales, or a substantial number of relatively small sales, within twelve months while conducting or liquidating one business or estate. Sections 6015 and 6203 supported the permit, tax and remittance conclusion.

The counting unit was the completed sale, not the event or bidder. One item sold to one bidder was one sale. Several items bundled into one lot and accepted in one bid were also one sale. In an ordinary multi-lot auction, each hammer drop made another sale even if the same bidder bought multiple lots. Thus, one auction could cross the threshold.

Davis stated it was likely that the administrator made more than two substantial sales for one estate at auction during twelve months. The PDF does not confirm an actual count. One sentence prints more than two subsequent sales; the surrounding quoted rule and conclusion use three-or-more or more-than-two sales. The original wording remains preserved below.

The current live annotation first says a permit is required for more than two substantial sales per estate during a twelve month period, consistent with the letter. Its next sentence says, Thus, if two substantial sales were made, a seller's permit is required, which conflicts with both the preceding sentence and the supporting letter's one-or-two-sales treatment. This page does not silently choose new words for the live source; it applies the threshold stated consistently in the supporting document and discloses the conflict.

The PDF does not include the written request, identity or legal status of the administrator beyond the redacted form, Regulation 1573 enclosure, complete October 24, 1952 opinion, estate records, auction notices or catalogs, bidder and lot sheets, hammer prices, invoices, payment records, counts, seller's permit, returns, tax calculations, assessments, payments, refund claims, protests, appeals, or later outcomes. It gives a general opinion and does not establish that a particular estate crossed the threshold or that tax was assessed or paid. It copies an unidentified Compliance recipient.

The live annotation preserves the single-item and lot rule, hammer-drop counting, same-bidder rule, public-administrator and per-estate setting, permit result, and September 7, 1984 date. Beyond its two-sale conflict, it omits the requester and reported auction count, court-officer scope, small-sales alternative, separate-estate rationale, Regulation 1573 enclosure, Annotation 395.0960 and 1952 opinion, counsel's likely qualification, source typo, missing records, and absent tax outcome.

What this means for you

Estate administrators and auction operators

One auction date can contain enough separate lot sales to trigger retailer obligations for that estate.

Accountants and tax professionals

Count completed lots per estate over the rolling period, not merely the number of auction sessions or the number of distinct bidders.

Common questions

Q: Is a multi-item lot one sale?
A: Yes, if the lot is sold together to one bidder in one transaction.

Q: Are several lots won by the same bidder one sale?
A: No. Each hammer drop is generally a separate sale.

Q: Is the count combined across all estates?
A: No. The historical rule applied the count separately to each estate.

Q: Can one auction require a seller's permit?
A: Yes, if it includes more than two substantial sales for the estate.

Q: Did counsel establish how many sales this administrator actually made?

A: No. The letter said it was likely there were more than two substantial sales for an estate but includes no lot sheets, counts, prices, returns, or tax records.

Q: Does the live annotation correctly state the threshold throughout?

A: No. It first says more than two, then says if two. The supporting letter and quoted authorities treat one or two as below the substantial-sales threshold and three or more as requiring retailer treatment.

Q: Is a large lot with many items necessarily many sales?

A: No. If all items are bundled and sold to one bidder in one accepted bid, the letter treats the lot as one sale.

Q: Does this source document tax assessed to a particular estate?

A: No. It is a general written opinion without identified estate, transaction, assessment, payment, or later proceeding records.

Citations and references

• California Revenue and Taxation Code sections 6015 and 6203
• California Sales and Use Tax Regulation 1573 — quoted; copy described as enclosed but not included
• Business Taxes Law Guide Annotation 395.0960 and October 24, 1952 sales-tax counsel opinion — annotation quoted; complete opinion not included
• Request, administrator and estate records, auction and lot evidence, permits, returns, tax proceedings, and outcomes — described or implicated but not included

Verbatim support

From the official September 7, 1984 Tax Counsel letter:

If no more than two such sales per estate in any twelve-month period are made, the sales tax would not apply to such sales; and the SCPA would not be required to obtain a seller's permit.

The general rule is that each time the hammer drops there has been a sale. This is true whether there are sales to several bidders or several sales to the same bidder.

If there are more than two subsequent sales per estate in a twelve-month period, under Regulation 1573 and Annotation 395.0960 (quoted above), sales tax will apply and the SCPA must obtain a seller's permit and remit sales tax to the Board (Revenue and Taxation Code Sections 6015 and 6203), even though all such sales occur at a single auction.

We are of the opinion that it is likely that the SCPA makes more than two sales for a substantial amount at auction in a twelve-month period for one estate.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 395.0472
• Original supporting opinion: 395.0472 PDF

Original ruling text

395.0472

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 323-7712

September 7, 1984

Mr. S--- S--S--- C--- P--- A--XXXX --- Street
---, CA XXXXX
Dear Mr. S---:
Your request for a written opinion has been referred to me for response. We understand that you have questions regarding whether the sales made by the S--- C--- P--- A--(SCPA) are subject to sales tax. We further understand that the SCPA does not hold more than three auctions in a twelve-month period in the administration of any one estate. You cite a sales tax counsel opinion of October 24, 1952, as authority that sales by the SCPA are not subject to sales tax. Applicable law is Regulation 1573 (copy enclosed) which, in interpreting Revenue and Taxation Code Section 6015, states (in pertinent part): “Tax applies to the sale of tangible personal property by an officer of the court such as a sheriff, commissioner, assignee for the benefit of creditors, executor or administrator (including a bank), or other officer appointed by a court to make the sales if the officer is a retailer with respect to that sale. “Generally, an officer is a retailer if he makes three or more sales of tangible personal property for substantial amounts, or a substantial number of sales for relatively small amounts, in any period of 12 months in the conduct or liquidation of a single business or estate.” The sales tax counsel opinion of October 24, 1952, which is cite is Business Tax Law Guide Annotation 395.0960, which states: “Public Administrators, sales by, governed by the same general rule as executors and administrators. Thus, tax is inapplicable if but one or two sales are made during administration of a particular estate, regardless of how many estates may be in the course of administration by a public administrator. If, however, the administrator makes three or more sales in

Mr. S--- S---

-2-

September 7, 1984
395.0472

substantial amounts during any twelve-month period during the administration of a particular estate the tax is due. 10/24/52.” An auction may be a sale of one item or a sale of a “lot” (a number of items) to a single bidder. In either case, the transactions would be regarded as a single sale for purposes of the Sales Tax Law. If no more than two such sales per estate in any twelve-month period are made, the sales tax would not apply to such sales; and the SCPA would not be required to obtain a seller’s permit. However, as is commonly the case, an auction may consist of a number of sales of tangible personal property. The general rule is that each time the hammer drops there has been a sale. This is true whether there are sales to several bidders or several sales to the same bidder. If there are more than two subsequent sales per estate in a twelve-month period, under Regulation 1573 and Annotation 395.0960 (quoted above), sales tax will apply and the SCPA must obtain a seller’s permit and remit sales tax to the Board (Revenue and Taxation Code Sections 6015 and 6203), even though all such sales occur at a single auction. We are of the opinion that it is likely that the SCPA makes more than two sales for a substantial amount at auction in a twelve-month period for one estate. If such is the case, the SCPA must obtain a seller’s permit. If we may be of any further assistance, please write this office. Very truly yours,

James A. Davis
Tax Counsel

JAD:jlh
Enc.
cc:
--- – Compliance (VES)