What refund applied when an agent prepaid sales tax to a section 6015 retailer based on expected resale price but instead used or lost the property?

Plain-English summary

The agent's payment to the section 6015 retailer was treated as prepaid sales tax based on the property's expected retail selling price.

If the agent did not resell the property and instead used it, the proper tax measure was the agent's cost rather than the expected resale price. The memorandum therefore allowed a refund of the tax attributable to the difference between those two amounts.

If the property was destroyed instead of sold or used, the memorandum allowed a refund of the entire tax amount the agent had paid to the section 6015 retailer. It left to district staff whether to require the retailer to file the refund claim or allow the agent to file it.

Common questions

What if the agent used the property?

Tax remained based on the agent's cost, with the excess prepaid on the expected resale price refundable.

What if the property was destroyed?

The full prepaid tax amount was refundable under the memorandum.

Who had to file the claim?

The memorandum left that procedural choice to audit staff.

Citations and references

• California Revenue and Taxation Code section 6015 — retailer-agent framework identified by the memorandum

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/465-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/465-0066.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

Los Angeles District – District
Principal Auditor (JTQ)

From:

Tax Counsel (GLR) - Headquarters

Subject:

Refund of Tax Paid to a 6015 Seller

465.0066
Date:

August 9, 1971

Please refer to your memo of July 30, 1971 concerning the refund claim of tax paid to a 6015 retailer. I view the payment to the 6015 retailer, by his so-called agent, as a prepayment of sales tax. Therefore, if the agent does not actually sell the property, i.e., he uses it, then the proper tax should only be on his cost of the merchandise rather than the expected selling price. Accordingly, a refund would be due on the difference between the agent’s cost price and the expected retail selling price. This thinking is set forth in Mr. D---’s memo of June 12, 1970 to A--- B--- D---, copy enclosed. Following this reasoning through, it is our opinion that if the property is destroyed that a refund would be allowed for the total amount paid by the agent to his 6015 retailer. I will leave to your judgment whether you wish to require the 6015 retailer to file the claim for refund or allow the agent to.

GLR:lb
Enclosure
cc:
Mr. Robert Nunes
Mr. T. P. Putnam