Were truckers on a retailer's payroll independent carriers when they received employee benefits and were treated as employees for deductions and taxes?
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This page answers the general question as of 1964. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
A retailer used truckers who were carried on its payroll, received employee benefits, and were treated as employees for payroll deductions and taxes.
California classified those truckers as employees rather than independent carriers. Their deliveries were transportation by facilities of the retailer.
The letter applied tax to employee-trucker charges and ordered a reaudit. It separately allowed some independent-carrier charges for an earlier period but taxed another period because the retailer's quotation failed the historical documentation requirements.
Common questions
Did payroll truckers count as independent carriers?
No, under the described employee facts.
How was their transportation classified?
As transportation by the retailer's facilities.
Did every independent-carrier period receive the same result?
No. Contract and documentation facts changed the result.
Citations and references
- Historical Sales Tax Ruling 58 — title, carrier, and documentation rules applied across the audit periods
- Business Taxes General Bulletin 61-23 — quotation requirements cited for one period
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/557-0640.pdf
Original ruling text
STATE OF CALIFORNIA
557.0640
STATE BOARD OF EQUALIZATION
December 2, 1964
Gentlemen:
We have again reviewed the facts relative to the petition for redetermination of additional taxes assessed against REDACTED TEXT in the determination dated January 30, 1964. It is our opinion that any trucker who is carried on the company’s payroll must be considered an employee rather than an independent carrier if he receives employee benefits prescribed by the REDACTED TEXT and is treated as an employee for purposes of payroll deductions and taxes. Accordingly, we believe that the charges for transportation by any such trucker during the audit period must be regarded as transportation by facilities of the retailer. In summary, then, we conclude as follows: 1. Tax applies to charges for transportation by any truckers in the company’s employ, as described above, during the periods of April 1, 1961 to June 30, 1961 and July 1, 1962 to March 31, 1963. 2. Tax applies to all delivery charges during the period of July 1, 1962 to June 30, 1962, regardless of whether deliveries were made by the company’s employees or by independent carriers, since the “Quotation” used by the company during this period did not meet the requirements of ruling 58 or Business Taxes General Bulletin 61-23. 3. Tax does not apply to charges for transportation by independent carriers during the period of April 1, 1960 to June 30, 1961 in those instances where sales were made “f.o.b. plant,” since sufficient doubt exists to resolve the question of title passage in favor of the company pursuant to subsection (c) of ruling 58 as amended June 7, 1960. The district office is being requested to conduct a reaudit in accordance with these views. A revised billing will be issued in due course. Very truly yours, E. H. Stetson Tax Counsel EHS:dse cc:
San Jose – District Administrator
Please make arrangements for the necessary reaudit of this taxpayer.
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