When were used vehicles sold through the General Services Administration subject to California use tax?

Plain-English summary

California reviewed why some purchasers of federal used vehicles appeared to register them without use tax. Section 6402 exempted many purchases from unincorporated federal agencies but excluded qualifying surplus property.

Under the federal statutes then in effect, section 484(c) authorized disposal of surplus property, while section 481(c) allowed an agency acquiring personal property to exchange or sell similar items and apply the allowance or proceeds toward replacements.

The Board's position was that property bought under section 484(c) was taxable, while property bought under section 481(c) was exempt. Public sales of vehicles from federal motor pools appeared to be section 484(c) surplus-property sales and therefore subject to use tax.

What this means for you

Federal vehicle buyers, DMV advisers, and auction professionals

Obtain the federal disposal authority, not just the seller's agency name. Whether the vehicle was surplus property or part of a similar-property exchange program controlled the result.

Common questions

Q: Were public federal motor-pool sales taxable?

A: Yes, under the memorandum's section 484(c) classification.

Q: Were all GSA-related sales taxable?

A: No. Qualifying section 481(c) exchange sales were treated as exempt.

Citations and references

• California Revenue and Taxation Code § 6402
• Former 40 U.S.C. §§ 472(g), 481(c), and 484(c)

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 560.0174
• Original supporting opinion: 560.0174 PDF

Original ruling text

State of California

Board of Equalization

560.0174

Memorandum
To:

From:

Subject:

Mr. Gary J. Jugum
Assistant Chief Counsel

Date:

March 11, 1992

Elizabeth Abreu
Tax Counsel
Sales of Used Cars by GSA
You have asked me to review the first paragraph on page 22 of pamphlet No. 23, “Occasional Sales of Vehicles, Vessels, and Aircraft.” This paragraph is based upon Revenue and Taxation Code section 6402 which exempts from use tax purchases of property from any unincorporated agency or instrumentality of the United States except property reported to the Surplus Property Board of the United States, or to any agency succeeding to the functions of that board, as surplus property by any owning agency. “Surplus property,” which is now defined in 40 U.S.C. section 472(g) of the Federal Property and Administrative Services Act of 1949, means any excess property required for the needs and the discharge of the responsibilities of all Federal agencies, as determined by the General Services Administration (GSA). Under 40 U.S.C. § 484(c) any executive agency authorized by GSA to dispose of surplus property may do so by sale, exchange, lease, permit, or transfer upon such terms as GSA deems proper. 40 U.S.C. § 481(c) provides that in acquiring personal property, any executive agency, pursuant to certain regulations, may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in such cases in whole or in part payment for the property acquired. It is the position of the Board, as set forth in Pamphlet No. 23, that property purchased from GSA under 40 U.S.C. § 484(c) is subject to use tax property purchased under 40 U.S.C. § 481(c) is exempt. Recently, the Department of Finance informed you that someone had complained that persons purchasing motor vehicles from GSA are not being charged use tax when they register the vehicles with the Department of Motor Vehicles. It appears to us that sales to the public of vehicles from the Federal motor vehicle pools are sold pursuant to 40 U.S.C. § 484(c) and are therefore subject to use tax. Oveta Riffle is going to check with DMV to see if they are registering such vehicle ex tax even though the owner does not present a BT-111. If the problem is not with the DMV, I recommend that the Board determine if the districts are issuing BT-111’s to persons who have purchased vehicles from GSA pursuant to 40 U.S.C § 484(c). EA:cl 0641E