Was an automobile partly exempt when an eligible veteran selected and received it but the Veterans Administration paid $1,600 directly to the dealer?

Plain-English summary

Under the program described, an eligible amputee veteran obtained a Veterans Administration certificate, negotiated with a chosen dealer, and took delivery of the automobile. The dealer then sent the VA the invoice and directly billed it for $1,600, which the VA paid to the dealer.

California treated the transaction as a sale to the United States only to the extent of that direct federal payment. It recommended that the invoice identify the Veterans Administration as the actual purchaser for the portion it would pay.

The conclusion was therefore a split-purchase rule, not a full exemption simply because an eligible veteran participated in a federal benefit program.

What this means for you

Auto dealers, veterans-benefit administrators, buyers, and tax advisers

Document each payer's legal obligation and direct payment. Show the federal agency as purchaser for its share when the program and transaction support that treatment.

Common questions

Q: Did the veteran select and receive the car?

A: Yes.

Q: What portion was treated as a federal purchase?

A: The amount billed to and paid directly by the Veterans Administration.

Q: What invoice treatment did California recommend?

A: Showing the VA as the actual purchaser for its payment share.

Citations and references

• Public Law 187, 82nd Congress, chapter 532, First Session

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 505.0760
• Original supporting opinion: 505.0760 PDF

Original ruling text

State of California

Board of Equalization

505.0760

Sacramento, California
December 5, 1951

E. H. Stetson
Sales of special automobiles to amputee veterans under Public Law 187, 82nd Congress, Chapter 532, First Session, Senate Bill 1864. As I understand the factual situation, pursuant to this statute, the veteran first applies to the Veterans' Administration for an eligibility certificate to make the purchase, negotiates a sale with the dealer of his choice and takes delivery of the car. However, a copy of the sales invoice is sent to the Veterans' Administration, and the dealer sends a bill for
$1,600.00 to the Veterans' Administration, and the Veterans' Administration pays the
$1,600.00 directly to the dealer.
You are advised that we regard such a transaction as a sale to the United States to the extent of the amount paid by the United States where that amount is billed directly to the United States by the dealer and where the United States makes payment directly to the dealer. We would also suggest that as further support of the contention that the sale is partially a sale to the Veterans' Administration that the invoice should show the Veterans' Administration as the actual purchaser to the extent that payment is to be made by the Veterans' Administration.

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