Were separately stated out-of-state storage charges included in California use tax when the equipment later entered California?

Plain-English summary

Storage was part of the original equipment purchase and therefore part of the total sales price. Later change orders that separately stated the storage charges did not remove them from the measure.

If the oven entered California for use here, California use tax included the full sales price, including the storage charges. If the oven never entered California, the letter said no California tax applied.

Common questions

Did separately stating storage make it nontaxable?

No.

What fact determined whether California tax ultimately applied?

Whether the equipment entered California for use in the state.

Citations and references

• Cal. Rev. & Tax. Code § 6011(a)(2) — sales price included services that were part of the sale
• Cal. Rev. & Tax. Code § 6203 — retailer use-tax collection duty discussed

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/570-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/570-0386.pdf

Original ruling text

570.0386

STATE OF CALIFORNIA

JOHN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-3723

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles

August 2, 1995

KATHLEEN CONNELL
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Dear __,
This office has received your letter dated May 25, 1995 in which you asked if storage charges are taxable in the following situation: Your office received a contract for the sale of a _, located in , California. The contract provided for storage charges with eventual shipment of the oven to California. You state that the storage charges were part of the original purchase order, that after change orders were received the storage charges were separately stated, that the property is currently stored in and that the ultimate disposition of the property is uncertain -- the property may not leave . California Revenue and Taxation Code section 6203 provides that ever y retailer engaged in business in California shall, at the time of making sales of tangible personal property for use in California or at the time the storage use, or other consumption becomes taxable, collect the use tax from the purchaser and give to the purchaser a receipt in the manner and in the form prescribed by the California state Board of Equalization. The taxable "sales price" includes the total amount of the sale without any deduction on account of the cost of the materials used, labor or service cost interest paid, losses or any other expense (California Revenue and Taxation Code Section 6011(a) (2)). The total amount of the sale or lease or rental price includes any services that are a part of the sale. If the oven does enter California for use in this state, the entire sales price is taxable, including the storage charges that bills to ___ whether separately stated or not. If the oven never enters California, no tax applies. If you require further assistance, please contact this office. Very truly yours,

Thomas J. Cooke
Staff Counsel