Was California-use intent measured when a car was ordered or when the buyer later acquired title, normally at delivery?

Plain-English summary

A doctor ordered an automobile in Illinois in May 1950 without intending to come to California. By the time the car was delivered in October, however, he knew he would use it in California.

California found use tax due. For this purpose, the controlling purchase date was when the buyer acquired title, normally delivery, not the earlier date when the order or binding purchase contract was made. An earlier order could obligate a later purchase without itself transferring the car.

The letter granted a one-month payment extension to April 30, 1951, with the historical statutory interest charge.

Common questions

Could the buyer rely on having no California plan when he ordered the car?

No. His intent when title passed controlled.

Could an earlier date apply?

Yes only if the buyer established that title actually transferred before delivery.

Citations and references

• Cal. Rev. & Tax. Code § 6201 — purchase-for-use timing issue identified by the source
• Cal. Rev. & Tax. Code § 6010 — definition of purchase quoted by the source
• Cal. Rev. & Tax. Code § 6459 — payment-extension authority cited by the source
• National Ice & Cold Storage Co. v. Pacific Fruit Express Co., 11 Cal. 2d 282 — contract-versus-transfer distinction cited by the source

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/570-0480.pdf

Original ruling text

570.0480

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 3, 1951

---, ---, ---, --Attorneys at Law
XXXX ----- XX, California
Attention:

Mr. W--- D.
Account No. K-XXXXXX
J--- D. H---, M. D.

Gentlemen:
We acknowledge your letter of March 29 in which you state that Dr. J--- H--- knew, when the automobile that he purchased in Illinois was actually delivered to him on October 18, 1950, that he was going to use it in California. You point out, however, that the order had been placed for the car on May 25, 1950, at a time when Dr. H--- had no intention of coming to California. It is our opinion, however, as we pointed out in our letter of March 9, that the date of “purchase” of the car, which is the controlling date in view of Section 6201 of the Sales and Use Tax Law, is the date of delivery of the car to the buyer unless the buyer is able to establish that he actually acquired title to the car at an earlier date. The mere placing of an order for a car does not constitute an actual purchase of the car, even though it may result in a binding contract under which the person placing the order is bound to make a purchase at a later date. The Courts have recognized this distinction for purposes of the sales tax. (See National Ice and Cold Storage Company v. Pacific Fruit Express Company, 11 Cal. 2d 282.) We believe that it would also be held for purposes of the use tax that the date of purchase is the date of acquiring title and not the date of entering into a contract to make the purchase. (See Section 6010 of the Sales and Use Tax Law which defines “purchase” as “(a) Any transfer, exchange, or barter, conditional or otherwise … of tangible personal property for a consideration. (b) A transaction whereby the possession of property is transferred but the seller retains the title as security for the payment of the price …”) This has been our consistent administrative interpretation not only with respect to the application of the use tax to automobiles purchase outside the State, but to all property subject to use tax in which the date of purchase differs from the date of the contract to purchase. We, therefore,

---, ---, ---, & ---

-2-

April 3, 1951
570.0480

regret that we are unable to advise you that your client does not owe the tax. We are, however, pursuant to your request, granting a one month’s extension for its payment. Under the extension hereby granted the due date is April 30, 1951. Pursuant to Section 6459 authorizing extensions, interest at the rate of one-half of one per cent per month, or fraction thereof, must be paid in addition to the tax. Please see that the attached duplicate copy of this letter is attached to your client’s tax return. Very truly yours

E. H. Stetson
Tax Counsel

EHS:ph
cc:

Mr. H. B. H---