After California's 1965 lease-law changes, were separately stated transportation charges on taxable rentals analyzed differently from charges on ordinary sales?
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This page answers the general question as of 1967. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
California changed its personal-property lease law effective August 1, 1965. Before that change, the Board had required delivery charges to stay in the tax measure when a lessor used taxable rental receipts as the measure.
After the change, leases—with statutory exceptions—were continuing sales within the definition of a sale.
Separately stated transportation charges for taxable rented property therefore followed the same rules as transportation charges in ordinary sales. The letter did not decide a particular delivery charge.
Common questions
Were taxable leases treated as sales?
Yes, as continuing sales, subject to exceptions.
Did lease transportation have a separate general rule?
No. It followed the ordinary sales framework.
Did this letter decide whether a specific charge was taxable?
No.
Citations and references
- Cal. Rev. & Tax. Code §§ 6006 and 6006.1 — definition of sale and continuing lease sales
- Historical Sales Tax Ruling 58 — transportation-charge framework referenced by the 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/557-0000-all.html
- Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/557-0320.pdf
Original ruling text
557.0320
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
May 22, 1967
Dear Mr. X:
This is in reply to your letter of May 11 enclosing a copy of a letter from “M” explaining that this Board took the position by letter dated August 12, 1962 that delivery charges in connection with the transportation of leased property were required to be included in the measure of sales and use taxes when the lessor elected rental charges as the tax measure. This was true until the changes in the law relating to personal property leases, effective August 1, 1965. From that date on, leases, with certain exceptions, are “continuing sales” as provided in Section 6006.1, and are within the definition of “sale” set forth in Section 6006. Accordingly, the application of the tax with respect to separately stated transportation charges for rented property is the same as in the case of ordinary sales. This is explained in Ruling 58, copy enclosed for your convenient reference. Very truly yours,
E. H. Stetson
Tax Counsel
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