Could a California dealer exclude air freight on out-of-state parts shipped under a 'will call' arrangement?

Plain-English summary

A dealer's invoice said out-of-state parts would ship by air freight via “will call.” California treated that wording as evidence that the parts were consigned to the dealer and then picked up by or delivered to the customer. On that assumption, the freight could not be excluded from the taxable measure.

The letter gave a different answer if its assumption was wrong. If the parts were consigned directly from Detroit to the customer and a common carrier delivered them without assistance or storage by the dealer's office, no tax was due on the air-freight charges.

Common questions

Did the words “will call” automatically make the freight deductible?

No.

What fact controlled the letter's answer?

Whether the shipment was consigned first to the dealer or directly to the customer.

Could direct-to-customer air freight be excluded?

Yes, under the common-carrier, no-dealer-handling facts described in 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/557-0720.pdf

Original ruling text

557.0720

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
September 18, 1964
Gentlemen:
This is in reply to your letter of August 17 in which you inquire about the applicability of the sales tax to certain delivery charges. The sales invoices enclosed in your letter states that the shipment was to be made via “will call.” This is an indication that the parts were not shipped directly to the purchaser but were consigned to you and later picked up by or delivered to the REDACTED TEXT. If such is the case, then the air freight bill cannot be excluded from the measure of the tax. If our assumption is incorrect, and the parts were consigned from Detroit directly to the REDACTED TEXT and delivered to them by a common carrier without assistance or storage by your office, then no tax is due on the air freight charges. If this answer is not responsive to your needs, please do not hesitate to write to us again. Very truly yours, E. H. Stetson Tax Counsel By PRD:md cc:

Oakland – District Administrator

Philip R. Dougherty