Could a section 6015(b) retailer accept a resale certificate from a designated agent who held a seller's permit for a different storefront business?

Plain-English summary

The Sales and Use Tax Department asked whether a section 6015(b) retailer could continue accepting resale certificates from designated agents who held seller's permits for unrelated businesses and sold through storefronts. Two older annotations appeared to forbid all such certificates.

The Legal Department concluded that section 6015(b) was permissive. It allowed the Board to treat salespeople and representatives as agents and their dealers or distributors as retailers, but did not require every representative to be treated as an agent without exception once the dealer was classified.

Accordingly, the statute did not prevent the Board from allowing a designated agent with a seller's permit for a different storefront business to issue a resale certificate. The memorandum supported continuing that administrative policy and recommended deleting the conflicting annotations.

What this means for you

Direct sellers, distributors, sales agents, storefront retailers, and tax professionals

Confirm the Board's actual agent designation, the seller's-permit business covered, and the storefront activity before accepting a certificate. Do not rely on permit possession alone without current policy support.

Common questions

Q: Did section 6015(b) automatically make every representative an agent?

A: No. The memorandum read the statute as permitting, not mandating, that treatment.

Q: Which agents could issue certificates under the policy?

A: Designated agents with seller's permits for different businesses who sold through storefronts.

Q: What happened to the conflicting annotations?

A: The memorandum recommended their deletion.

Citations and references

• California Revenue and Taxation Code § 6015(b)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 480.0355
• Original supporting opinion: 480.0355 PDF

Original ruling text

State of California

Board of Equalization
Legal Department – MIC: 82
Telephone: (916) 324-2657

Memorandum
480.0355
To :

Vic Anderson, Supervisor
Special Projects Team – MIC:40

From :

John Abbott
Tax Counsel IV – MIC:82

Subject:

Section 6015 Retailers – Resale Certificates From Agents

Date:

July 8, 2003

In your March 19, 2003, memorandum to Assistant Chief Counsel Janice Thurston, which was referred to me for reply, you wrote: “We are requesting your review and opinion regarding section 6015(b) retailers. The Sales and Use Tax Department has allowed section 6015(b) retailers to accept resale certificates from their agents who possess a seller’s permit issued for a non-section 6015(b) related business and sell through a storefront. This practice is based on a March 11, 1997 memorandum (attached) to District Administrators written by Mr. Dennis Fox, former Program Planning Manager. “A review of annotations 475.0168.200 and 480.0350 and their supporting letters state that a section 6015 retailer may not accept any resale certificate. These annotations appear to be inconsistent with the practice explained in the March 11, 1997 memorandum. “We would like to continue the practice of allowing resale certificates to be accepted by 6015 retailers pursuant to the March 11, 1997 memorandum. We request a legal opinion intended for annotation on the acceptance of resale certificates by section 6015(b) retailers from their agents who possess a seller’s permit issued for a non-section 6015(b) related business and sell through a storefront. The opinion will help resolve the apparent conflict with other annotations.” [Emphasis in original]. Background Revenue and Taxation Code section 6015, subdivision (b) provides: “(b) When the Board determines that it is necessary for the efficient administration of this part to regard any salesmen, representatives, peddlers or

Vic Anderson

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July 8, 2003
480.0355

canvassers as the agents of the dealers, distributors, supervisors, or employers under whom they operate or from whom they obtain the tangible personal property sold by them, irrespective of whether they are making sales on their own behalf or on behalf of the dealers, distributors, supervisors, or employers the board may so regard them and may regard the dealers, distributors, supervisors, or employers as retailers for purposes of this part.” Annotation 475.0168.200 states in part: “Purchases for Resale from a Section 6015 Retailer. A section 6015 retailer cannot accept a resale certificate from its sales representatives…. 11/24/93.” Annotation 480.0350 states: “Section 6015(b) Retailer—Sales to Holders of Seller’s Permits. A person, who has been classified by the Board as a section 6015(b) retailer, is responsible for tax on the ultimate retail selling price of the property sold by independent contractors to California consumers. A section 6015(b) retailer is considered the retailer of all sales made by its independent contractors, even those who have California seller’s permits. Accordingly, a section 6015(b) retailer cannot properly accept a resale certificate with respect to its sales to its independent contractors despite the fact that they may have California seller’s permits. 1/16/96.” Discussion We agree with your view that there is a conflict between section 6015(b) and these two annotations with respect to resale certificates. Section 6015(b) is permissive; it merely provides that the Board “may” regard “salesmen, representatives, peddlers or canvassers” as the agents of dealers, distributors, and others, and classify those dealers, distributors, and others as the retailers. The annotations interpret section 6015(b) to mean that, although the Board may choose to regard a dealer, distributor, or other person as a retailer, once it does so, then all of its “salesmen, representatives, peddlers or canvassers,” without exception, must be regarded as agents of that retailer. The statute does not support this interpretation. Thus, if a section 6015 retailer’s designated agent holds a seller’s permit for a different business, and has a storefront for that business, section 6015(b) does not prohibit the Board from allowing those types of agents to issue resale certificates. Since you would like to continue that administrative policy, we will recommend deletion of the two annotations in conflict. JA/sw

Vic Anderson

cc:

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July 8, 2003
480.0355

Ms. Freda Orendt (MIC: 47)
Ms. Charlotte Paliani (MIC: 92)
Ms. Kelly Reilly (MIC: 47)
Mr. Jeffrey L. McGuire (MIC:40)
Mr. Bruce Henline (OH)
Mr. Jim Kuhl (MIC:40)
Ms. Dorothy Laura (MIC:40)
Mr. Tim Kennedy (MIC:40)
Mr. Dave Rosenthal (MIC:50) [please delete annotations 475.0168.200 and 480.0350 for the reasons stated in this memo]