Could a horse seller treat one California sale as occasional by ignoring numerous horse sales made outside California?

Plain-English summary

A horse seller sought to remove one 1945 California sale from a retail-sales-tax determination as an occasional sale. Board records showed nine out-of-state sales that year that appeared to be retail, plus at least four out-of-state sales in every calendar year since 1942.

Board counsel said section 6015 did not limit retailer-status sales to transactions made in California. If a person's sales would be numerous enough to make that person a retailer had they occurred in California, their actual out-of-state location did not prevent retailer status.

The California sale therefore could be excluded only if the seller's total retail sales in all locations were two or fewer during the relevant twelve-month period. Counsel asked whether the seller still wanted a Board hearing.

Qualified file evidence, worldwide count, and source limits

Tax Counsel E. H. Stetson responded October 21, 1952 after the Board received the unnamed petitioner's October 6 letter and reconsidered a redetermination petition involving California horse-sale receipts. The petitioner newly offered to accept the determination if the one California sale in 1945 was removed as occasional.

Board staff reviewed the file and found nine sales outside California during 1945 that were apparently retail sales, while expressly saying the records did not establish that character with certainty. The file also reportedly showed at least four out-of-state sales in every calendar year since 1942. The PDF does not identify the horses, buyers, locations, dates, prices, or terms.

Stetson read section 6015 as not limiting the transactions that create retailer status to California sales. If total activity would be sufficiently numerous to make the person a retailer had it occurred in California, out-of-state location did not remove that status. A retailer's otherwise nonexempt California retail sale remained taxable.

The letter therefore conditioned exclusion of the 1945 California sale on the petitioner's entire retail-sales count everywhere being two or fewer during the twelve-month period containing that transaction. On the described file, counsel could not recommend exclusion.

This was not the final hearing outcome. Stetson asked whether the petitioner still wanted to be heard before the Board or would withdraw the hearing request after receiving the explanation.

The PDF does not include the October 6 letter, petition, determination, reviewed file, horse ownership and sale records, evidence that the nine transactions were retail, annual sales histories, California sale agreement, prices or receipts, seller's permit, returns, audit, tax calculation, assessment, payment, response, hearing withdrawal or hearing, Board minutes or order, refund or collection record, or later appeal. Its metadata shows Adobe's Paper Capture producer, but the source contains no case citations requiring the runbook's scanned-ruling citation check.

The live annotation preserves worldwide counting, hypothetical California retailer status, section 6015, tax on nonexempt California retail sales, and October 21, 1952 date. It omits the petitioner and redetermination posture, one 1945 California sale, nine apparently retail out-of-state sales and express uncertainty, annual counts since 1942, two-or-fewer condition, hearing choice, paper-capture source, missing records, and absent outcome.

What this means for you

Sellers making occasional California transactions

Under this historical view, limiting the count to California sales understated the selling activity. Out-of-state transactions could make an in-state sale non-occasional.

Accountants and tax professionals

Build a complete multi-state sales history for the relevant twelve months and verify which transactions were retail rather than assuming every recorded sale had that character.

Common questions

Q: How many California sales occurred in 1945?
A: One.

Q: What other sales appeared in the records that year?
A: Nine out-of-state sales that appeared to be retail.

Q: Did section 6015 count only California sales?
A: No, under counsel's interpretation.

Q: What total-sales ceiling could preserve occasional treatment?
A: Two or fewer retail sales everywhere in the relevant twelve months.

Q: Were the nine out-of-state sales definitely retail?

A: No. Counsel called them apparently retail and said Board records did not show that with certainty.

Q: Did the source identify those horses or buyers?

A: No. It provides only counts, with no item, purchaser, location, date, price, invoice, or contract details.

Q: Was the redetermination final after this letter?

A: The source does not show. Counsel asked whether the petitioner wanted a Board hearing or would withdraw the request, and no response or final order is included.

Citations and references

• California Revenue and Taxation Code § 6015
• October 6, 1952 letter, redetermination petition and Board file — referenced but not included
• Horse and buyer records, California and out-of-state transactions, retail classification evidence, permits and tax records, hearing response, Board action, and outcome — described or implicated but not included

Verbatim support

From the official October 21, 1952 Tax Counsel letter:

Although you made only one sale in California in 1945, you made nine sales outside of California in that year which are apparently retail sales, although our records do not indicate with certainty that this is the case.

Section 6015 defining retailer does not limit the sales made which constitute a person a retailer to sales made in California.

Accordingly, unless your entire sales made in any location in any twelve-month period in which the 1945 California sale was made amounted to two or less retail sales, we are unable to recommend the exclusion of this sale from the determination.

Will you kindly advise us whether you still desire to be heard before the Board or, in view of this explanation, you will withdraw your request for a hearing.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 395.0600
• Original supporting opinion: 395.0600 PDF

Original ruling text

395.0600
October 21, 1952
Following receipt of your letter of October 6 the Board took under consideration your petition for redetermination of retail sales tax measured by receipts from sales of horses in this State. You indicate that you will agree with our determination provided the one sale in 1945 be considered as an occasional sale and eliminated from the measure of the determination. You have not heretofore presented this argument and, upon review of the file, we find that, although you made only one sale in California in 1945, you made nine sales outside of California in that year which are apparently retail sales, although our records do not indicate with certainty that this is the case. Our records also indicate that you made at least four sales in each calendar year since 1942 outside of California. We are unable to regard the one sale in California in 1945 as an exempt occasional sale. In our opinion a person is a retailer as defined in the Sales and Use Tax Law, regardless of where sales are made if the sales are sufficiently numerous to constitute him a retailer had they been made in California. Section 6015 defining retailer does not limit the sales made which constitute a person a retailer to sales made in California. Thus, a person who has the status as a retailer is, in our opinion, subject to the tax with respect to any retail sales made in California not otherwise exempt. Accordingly, unless your entire sales made in any location in any twelve-month period in which the 1945 California sale was made amounted to two or less retail sales, we are unable to recommend the exclusion of this sale from the determination. Will you kindly advise us whether you still desire to be heard before the Board or, in view of this explanation, you will withdraw your request for a hearing. Very truly yours E. H. Stetson Tax Counsel