When did section 6247's California-use presumption apply to property delivered outside the state to a California resident?

Plain-English summary

The memorandum concluded that section 6247 could apply when property was delivered outside California to a purchaser known by the retailer to be a California resident, but only when the transaction had sufficient California involvement.

It identified three sufficient connections: the property was in California when the sales contract was made, the contract was negotiated in California, or the order originated in California. It said the connections were insufficient when all negotiations occurred outside California and the property was delivered outside California from an out-of-state point.

The statutory presumption was not conclusive. Known circumstances could controvert it without a separate purchaser statement—for example, when property was shipped from California to a contractor for an out-of-state contract and the facts made out-of-state use probable.

The memorandum also said the rule could apply to vehicles delivered from California dealer inventories, depending on those transaction-specific connections. Its closing instruction said the memorandum would supersede Annotation 570.0860 and should be applied only after that annotation was deleted from the guide.

Common questions

Was California delivery required for section 6247 to apply?

No. The memorandum analyzed out-of-state delivery and focused on California's involvement in the transaction.

Could evidence of actual out-of-state use overcome the presumption?

Yes. The memorandum said known circumstances making out-of-state use probable could controvert it.

Citations and references

• Cal. Rev. & Tax. Code § 6247 — statutory presumption interpreted by the memorandum
• August 2, 1977 Carl Knopke memorandum — stated basis for the conclusion; attached to the original but absent from the published PDF

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/570-0860.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Bernardino – Auditing (WEP)

From:

Headquarters – Legal (TPP)

Subject:

Property Delivered Subject to Section 6247

570.0860

Date:

August 25, 1977

This is in connection with the correspondence Mr. Rigby has had with you under the dates of June 7, June 22, and July 5, 1977. Since he is no longer in the business taxes section, I am writing this to you in his place. Attached is a copy of a memorandum of August 2, 1977, from Carl Knopke, which is the basis for our present conclusion that Section 6247 does apply with respect to property delivered outside this state to a purchaser known by the retailer to be a resident of this state, as long as there are sufficient “incidences of involvement” by this state with the transaction. Such incidences are sufficient if the property is located here at the time the contract for sale is entered into, or if the contract is negotiated here, or if the order originates here. The incidences are not sufficient where all negotiations are outside the state and the property is delivered to the purchaser outside the state from a point outside the state. The fact that the property is delivered to a point in this state does not prevent the application of Section 6247. The language of the section does not call for such a restriction and to infer one would seem to discriminate against out-of-state dealers. Of course, the circumstances may be such as to overcome the presumption without a specific statement in writing from the purchaser, as where the property is shipped from California to a contractor for use in fulfilling a contract outside the state. If there are circumstances known to us which make it probable that the property was used outside the state, the presumption may be considered controverted.

San Bernardino Auditing (WEP)

-2-

August 25, 1977
570.0860

In accord with what is stated herein, Section 6247 may be applied to deliveries of vehicles from inventories of dealers in California, depending on whether there are sufficient “incidences of involvement,” as described above. This memorandum will supersede Annotation 570.0860, and should be applied only after that annotation is deleted from the Business Taxes Law Guide.

TPP:po
Attachment
cc:

G. L. Rigby
W. E. Burkett
G. J. Jugum
C. G. Knopke