Could a taxpayer retroactively change a bill of lading solely to make a sale fit the carrier exemption?

Plain-English summary

A bill of lading could be corrected to fix a genuine clerical error or add information that was unavailable when originally prepared. It could not be changed solely to transform the transaction retroactively into one satisfying section 6385.

The letter described a historical practice of treating one year as a reasonable correction period when there was no tax-avoidance purpose. Even later corrections might be accepted for obvious extension or transposition errors, but the Board said it had not accepted similar corrections after a long delay where the original freight rate differed materially from the published tariff.

The source's final sentence says the “date of sale” was deleted from the tax measure, wording that is not readily reconcilable with the preceding rejection. The official annotation isolates the usable holding: retroactive restructuring solely to gain exemption is ineffective.

Common questions

Were all later corrections rejected?

No. The letter allowed for real clerical mistakes and information unavailable at original preparation.

What kind of change was ineffective?

A change whose only purpose was to make the completed transaction fit section 6385 after the fact.

Is the letter's one-year practice current?

The source itself carries a note that correction timing is now addressed by Regulation 1621.

Citations and references

• California Revenue and Taxation Code section 6385 — historical carrier exemption prompting the bill-of-lading issue
• California Code of Regulations, title 18, section 1621 — later rule identified by the source's margin note as governing correction timing

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/500-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/500-0040.pdf

Original ruling text

STATE OF CALIFORNIA

500.0040

STATE BOARD OF EQUALIZATION

May 16, 1955

We have reviewed your letter of May 2, and the copy enclosed therewith of the letter to you dated April 7 from ______. The question of whether bills of lading may be "corrected" to show thereon the true freight in order to gain exemption under Section 6385 of the Sales and Use Tax Law has been discussed with the Office of the Attorney General. It was generally concluded that whether the so-called correction should be recognized depends upon whether it was merely to correct a clerical error or to insert some item not available when the document was originally made out or whether it was for no purpose other than to change the transaction retroactively to meet the provisions of Section 6385.

Time
allowed for
corrections
is now
covered by
Reg. 1621
-JH

In reviewing many claims of this type we have followed the practice of regarding one year as a reasonable time for the correction of documents supporting claimed deductions when there was no evidence that corrections were made for the primary purpose of avoiding tax liability. Corrections made more than year from the date of sale might be accepted only, for example, when a correct rate was used but the amount of freight was incorrectly extended, or, as another example, where there had been a transposition of the sales price of the fuel and the freight charges. In the present case, however, it appears that the bill of lading showed a rate of
$27.25, whereas $17.00 was the rate established by the published tariffs. We have not accepted similar corrections where so long a time has elapsed, as in this case, from the date of sale to the date of correction. It is, therefore, our opinion that the date of sale has properly been deleted from the measure of tax upon which ______refund claim dated October 23, 1953, has been based. Very truly yours, E. H. Stetson Tax Counsel cc: San Francisco - Tax Administrator