Did California law compel a retailer to try to collect sales-tax reimbursement from the buyer on every retail sale?

Plain-English summary

California corrected earlier guidance that had said a retailer was compelled to attempt to collect sales-tax reimbursement from buyers on every retail sale.

The memorandum said section 6052 indicated an intention that the purchaser be the source of funds for paying the tax. But the cited court decisions allowed seller and purchaser to contract as they wished about the total selling price. The section therefore did not create the categorical collection duty stated in the earlier letter.

Common questions

Did every retailer have to attempt reimbursement collection?

No.

Who remained responsible for the tax?

The source addressed reimbursement collection and the agreed selling price; it did not shift the retailer's tax liability to the buyer.

What could the parties decide by contract?

The total amount of the selling price.

Citations and references

• California Revenue and Taxation Code § 6052
• Roth Drugs, Inc. v. Johnson, 13 Cal. App. 2d 720
• De Aryan v. Akers, 12 Cal. 2d 781, cert. denied, 308 U.S. 581

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/460-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/460-0020.pdf

Original ruling text

State of California

Memorandum

To:

Mr. J. S. Knight (JHMcC)

From:

E. H. Stetson

Subject:

E--- and E--Certified Public Accountants
Suite XXX, --- National Building
--- --- X, California

Board of Equalization

460.0020
Sacramento, California
August 8, 1952

The letter from E--- and E---, copy of our reply attached, brought to light your letter of July 17, 1951, to the same firm. We had intended to mention this earlier but the copy of your letter became filed before we did so. You state on page 3 “In accordance with these sections the retailer is compelled to make an attempt to collect reimbursement for the sales tax from the vendees on all retail sales.” This is not an entirely accurate statement of the law as interpreted by the courts, not withstanding the language of Section 6052. The court holdings may be summarized by stating that the section indicates an intention that the source of the funds for payment of the tax is the purchaser, but that the seller and purchaser are free to contract in accordance with their wishes as to the total amount of the selling price. See particularly Roth Drugs, Inc. v. Johnson, 13 Cal. App. 2d. 720 and De Aryan v. Akers, 12 Cal 2d 781, cert. den. 308 U. S. 581.

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