Was a California truck division taxable when it delivered a chassis to a California installer before an out-of-state retailer's fire-truck sale?

Plain-English summary

An out-of-state retailer ordered a truck chassis that a California motor division delivered to another California company for installation of firefighting equipment. California said the tax result depended on whether the installer acted for the final New Mexico customer or for the retailer.

If the customer separately hired the installer and the retailer's contract covered only a bare truck delivered to that installer, the installer would be the customer's agent. Under section 6007 as quoted in the letter, the California motor division's delivery to the consumer or consumer's agent would be deemed a California retail sale, and the division would owe tax measured by the retailer's retail selling price.

If instead the retailer contracted to provide a completely equipped fire truck, hired the installer itself, and arranged for the completed truck to be driven from Los Angeles to New Mexico, the installer would act for the retailer. The motor division's delivery would then be to a retailer for resale rather than to a consumer, making that transfer exempt under the letter's analysis.

The Board requested more facts if neither scenario fit, including who drove the truck to New Mexico, whom the driver worked for, who paid the installer, and who inspected the completed work.

Common questions

Did California give one unconditional answer?

No. The source described alternative outcomes because the contracts and agency relationships were not fully established.

When was the California delivery taxable?

When the installer acted for the final customer, so the California motor division delivered to a consumer or the consumer's agent.

When was the delivery treated as a resale transfer?

When the out-of-state retailer promised a fully equipped truck, hired the installer, and controlled the arrangements for completing and delivering it to New Mexico.

Citations and references

• California Sales and Use Tax Law § 6007, quoted and applied in the 1955 letter

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/495-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/495-0860.pdf

Original ruling text

495.0860

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
January 7, 1955

Dear REDACTED TEXT:
This is in reply to your letter of September 13, 1954 to Mr. REDACTED TEXT, REDACTED TEXT Motor Division, REDACTED TEXT, Texas, with copy to us. You state that REDACTED TEXT, New Mexico, decided to purchase a fire truck. A REDACTED TEXT truck was ordered through you. You, in turn, placed your order with the REDACTED TEXT Division and the order was filled by a truck from the REDACTED TEXT plant at REDACTED TEXT, California. The REDACTED TEXT Motor Division delivered this truck to REDACTED TEXT, California, for the installation of fire fighting equipment. The California sales tax applies to retail sales of tangible personal property in this state. Section 6007 of the Sales and Use Tax Law defines a retail sale as “a sale for any purpose other than resale in the regular course of business.” That section also provides “The delivery in this state of tangible personal property by an owner or former owner thereof or by a factor, if the delivery is to a consumer pursuant to a retail sale made by a retailer not engaged in business in this state, is a retail sale in this state by the person making the delivery. He shall include the retail selling price of the property in his gross receipts.” The REDACTED TEXT Motor Division is an owner or former owner of tangible personal property in question. You are a retailer not engaged in business in this state and you have made a retail sale. Accordingly, the REDACTED TEXT Motor Division is deemed to have made a retail sale and the REDACTED TEXT Motor Division must pay tax on the retail selling price if it makes delivery in this state to a consumer (your customer or your customer’s agent). If your customer made its own contract with REDACTED TEXT, and if your customer’s contract with you was simply to purchase a truck and have it delivered to REDACTED TEXT in Los Angeles, then the tax would apply as set forth in Section 6007 quoted above. If your contract with the customer was to sell a completely equipped fire truck and if you made the agreement with the REDACTED TEXT Co. and if you made arrangements for having the truck driven from Los Angeles to New Mexico, then REDACTED TEXT would be your agent rather than an agent of the customer, in which case REDACTED TEXT Motor Division would be regarded as making a delivery to a retailer (exempt sale for resale) rather than a delivery to a consumer (taxable retail sale). If you believe that the transaction is exempt or if the facts do not fit into one of the situations which we have explained in this letter, we shall give further consideration to a more detailed statement you might wish to make. Such statement should include the identity of the person

REDACTED TEXT

-2-

January 7, 1955
495.0860

driving the unit from Los Angeles to New Mexico, the person for whom this driver works, a description of the contractual arrangements with REDACTED TEXT (who made payment and who inspected for conformance to contract), etc. Very truly yours, Bill Holden Assistant Counsel BH:ja