Ezel / Tax Rulings / CA

How was tax split when a farmer and the United States were separately obligated to pay portions of conservation-material purchases?

Short answer The federal government's separately obligated share was an exempt United States purchase, while the farmer's separately obligated share remained taxable.
State
CA
Ruling
Annotation 505.0120
Tax type
Sales and Use Tax
Issued
1950-08-21
Issued by
California State Board of Equalization
Requested by
A conservation-material seller
Topics
soil conservation farmers
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1950. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1950
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an August 21, 1950 California State Board of Equalization tax-counsel letter published by CDTFA as support for a sales and use tax annotation. It depends on the United States and farmer being separately obligated for their respective portions of the conservation-material price. Verify current program and contract terms. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Under the Soil Conservation and Domestic Allotment Act arrangement described, the United States and a farmer jointly acquired conservation materials from a retailer. Each was separately obligated to pay its own portion of the price.

California treated the government's paid interest as purchased by the United States and exempt from sales and use tax. The farmer's paid interest remained taxable.

What this means for you

Farmers, conservation programs, material vendors, and tax advisers

Allocate tax according to each party's enforceable payment obligation. A government contribution can support partial exemption when it represents the government's own purchase share rather than reimbursement of the farmer.

Common questions

Q: Was the entire purchase exempt?

A: No.

Q: Which portion was exempt?

A: The portion the United States was separately obligated to pay.

Q: Was the farmer's share taxable?

A: Yes.

Citations and references

  • Soil Conservation and Domestic Allotment Act, 16 U.S.C. § 590

Source

Original ruling text

505.0120

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
August 21, 1950

Gentlemen:
Your letter of July 19 has been referred to the undersigned for answer. We have reviewed the question of the applicability of the California Sales and Use Tax Law to purchases made pursuant to the Soil Conservation and Domestic Allotment Act (16 U.S.C.A. 590). From your letter and the papers attached thereto, it appears that the united States Government and the farmer together purchase certain conservation materials from a retailer. The facts indicate that the Government and the farmer are separately obligated to pay respective portions of the purchase price. It is our opinion that the interest paid for by the Government is in effect purchased by the Government and is, therefore, not subject to the sales or use tax. We are of the opinion, however, that the interest paid for by the farmer is subject to the tax.

Very truly yours,

E. H. Stetson
Tax Counsel

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