Did two corporations making only California sales for resale need seller's permits, collect tax, or hold resale certificates?

Plain-English summary

An unidentified representative asked five procedure questions for two corporations licensed in California. Corporation A manufactured an undescribed item outside the state, stored it in a California warehouse and sold it from time to time to Corporation B. Corporation B resold the item to various California distributors.

Based expressly on the representative's statements, neither corporation incurred sales tax because each sale was for resale. Neither incurred use tax because neither used or consumed the item in California and it remained held for sale in the regular course of business at all times.

Both corporations nevertheless needed California seller's permits. Counsel treated A's sale as made in California because the item was in the California warehouse when sold. B's sale to California distributors was also a California sale. The opinion said all sellers needed permits even if every sale was an exempt sale for resale.

The historical opinion said businesses in that position filed a yearly return rather than the then-normal quarterly or monthly return. It advised A to obtain a resale certificate from B and said a single blanket certificate appeared sufficient. It said B should obtain certificates from the distributors and again said one blanket certificate from each appeared sufficient. That qualified wording is advice, not proof that any certificate was obtained or accepted.

The source does not include the March 11 request, identify the product or warehouse, or supply contracts, title and delivery terms, inventory records, invoices, certificates, permits, returns, tax computations, audits or later outcomes. It offers discussion with a named employee at the Board's former Chicago office and 600 South Michigan Avenue address; that 1955 contact information is not current filing guidance.

Source posture

The live 410.0360 annotation, in the 2026 revision of the Business Taxes Law Guide, preserves the two-corporation chain, California warehouse and distributors, resale-only sales-tax conclusion, held-for-sale and no-use condition, no-use-tax conclusion, and permit requirement. It omits the five-question request, California-sale situs explanation, annual-return instruction, resale-certificate advice, qualified blanket-certificate statements, historical Chicago contact, missing records and absence of an applied outcome.

CDTFA's Annotated Legal Opinions collection says the letters are summarized as annotations and that statutory law controls whenever a statute and annotation conflict. The official two-page 410.0360 PDF has a clean native text layer and one small page-1 stencil, so no OCR was required. Both fresh direct PDF downloads and both live-annotation downloads were byte-identical, and duplicate default PDF text extractions matched. The original-text section below remains byte-identical to its committed version and matches the fresh official extraction after removing only the extractor's terminal newline and form feed.

What this means for you

Manufacturers, distributors, and tax professionals

Exempt resale activity can still require permits and returns. Keep current certificates and transaction records through every link; document where property is located, when title and possession pass, and whether anyone uses or consumes it. Check current situs, storage, resale, certificate, permit and filing-frequency rules rather than relying on the 1955 annual-return or office instructions.

Common questions

Q: Did either corporation owe sales tax?

A: Not on the represented facts, because every stated sale was for resale. The source supplies no invoices or resale records.

Q: Did California storage create use tax?

A: Not by itself. The answer depended on the item remaining held for sale at all times and neither corporation using or consuming it in California.

Q: Did both corporations need permits?

A: Yes. Counsel treated both as California sellers even though all their stated sales were for resale.

Q: Could they use blanket resale certificates?

A: Counsel said a single blanket certificate from B to A and one from each distributor to B would appear sufficient. The source supplies no certificates or later acceptance.

Q: Why was A's sale treated as a California sale?

A: Because the item was located in A's California warehouse when sold, according to the opinion.

Q: Did the source show actual permits, returns or tax outcomes?

A: No. Those records and the underlying five-question request are absent.

Citations and references

• March 11 request containing five questions — described but not reproduced; its year is not independently printed
• California Sales and Use Tax Law seller-permit requirement — invoked without a section number
• Historical yearly-return instruction and blanket resale certificates — described without forms or separate authority
• Product, warehouse, inventory, contract, title, delivery, invoice, resale-certificate, permit, return, tax, audit and outcome records — described or implicated but not included

Verbatim support

From the official March 21, 1955 Tax Counsel opinion:

Neither Corporation A nor Corporation B incur liability for sales tax as the sales by each are, according to your statement, sales for the purpose of resale.

Neither Corporation A nor Corporation B incur liability for use tax with respect to the item which, according to your letter, is not used or consumed in this State by either A or B as the item is at all times being held for sale in the regular course of business.

Under the California Sales and Use Tax Law, all “sellers” are required to hold seller’s permits even though all sales are for resale and thus, exempt from tax.

It would be advisable for Corporation A to secure resale certificates from Corporation B although it would appear that a single blanket certificate would be sufficient.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 410.0360
• Original supporting opinion: 410.0360 PDF

Original ruling text

410.0360

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

March 21, 1955

X---------------------

Gentlemen:
This is in answer to your letter of March 11 inquiring concerning correct sales tax procedure with respect to two corporations which you represent. Corporation A, licensed to do business in California, manufactures an item outside of California and stores it in a warehouse in California. Corporation B, licensed in California, from time to time purchases the items from Corporation A and sells it to various California distributors. Answering the five questions raised in your letter in order, we advise:

1. Neither Corporation A nor Corporation B incur liability for sales tax as the
   sales by each are, according to your statement, sales for the purpose of resale.
2. Neither Corporation A nor Corporation B incur liability for use tax with
   respect to the item which, according to your letter, is not used or consumed in this State by either A or B as the item is at all times being held for sale in the regular course of business.
3. Both Corporation A and Corporation B should hold a California seller’s
   permit. When the item is stored by A in a warehouse in California and sold, the sale is considered as made in California as that is where the property is located when sold. When B sells the item to distributors that again is a sale in California. Under the California Sales and Use Tax Law, all “sellers” are required to hold seller’s permits even though all sales are for resale and thus, exempt from tax. In such cases, a yearly return is filed rather than the normal quarterly or monthly return.
4. It would be advisable for Corporation A to secure resale certificates from
   Corporation B although it would appear that a single blanket certificate would be sufficient.

5. Corporation B should secure resale certificates from the various distributors to which it makes sales. Again it would appear that a single blanket certificate from each of the distributors would be sufficient. In the event you desire to discuss any of these matters with a representative of this Board, we have an office in Chicago at 600 South Michigan Avenue, Rooms 1411 and 1412; Mr. F. A. Lagomarsino is in charge. Very truly yours,

E.H. Stetson
Tax Counsel

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Chicago (FAL)