Were retail sales made by or to Southern California public housing authorities exempt because the authorities were public bodies?

Plain-English summary

Southern California public housing authorities asked whether their status as public bodies, corporate and politic, made transactions tax exempt.

California noted that section 6005 includes counties, municipalities, districts, and other state political subdivisions within the definition of person. Retail sales made by housing authorities were taxable, and retail sales made to them also were taxable.

Although the Sales and Use Tax Law exempted sales made to the United States, the opinion found no exemption for sales made to or by California political subdivisions.

What this means for you

Housing authorities, vendors, and tax professionals

Do not extend the federal-purchaser exemption to a local public housing authority. Identify the authority as a state political subdivision and look for a transaction-specific exemption before treating either its purchases or sales as exempt.

Common questions

Q: Were sales by a public housing authority exempt?

A: No, according to the opinion.

Q: Were purchases by the authority exempt?

A: No. The opinion found no general exemption for sales to a state political subdivision.

Q: Did the United States exemption apply to the authority?

A: No. The opinion distinguished the federal government from California political subdivisions.

Citations and references

• California Revenue and Taxation Code § 6005

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 530.0050
• Original supporting opinion: 530.0050 PDF

Original ruling text

530.0050
STATE OF CALIFORNIA
MEMBER
First District

STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916)920-6563

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

January 27, 1994

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

This is in response to your letter of October 14, 1993.
On behalf of public housing authorities in Southern California, you have inquired about taxexempt status under the Sales and Use Tax Law. You point out that such authorities are public bodies, corporate and politic. The California Sales and Use Tax Law provides that “person” includes “any county, city and county, municipality, district or other political subdivision of the state…” (Rev. & Tax. Code § 6005.) Retail sales made by public housing authorities are subject to tax. Retail sales made to public housing authorities are subject to tax. While there is a sales tax exemption for sales made to the United States, there are no exemptions for sales made to or by political subdivisions of this state. Sincerely,

Gary J. Jugum
Assistant Chief Counsel