Was an out-of-state factory branch a dealer outside California when the factory itself was in California?

Plain-English summary

A factory branch physically located in another state could be the "dealer located outside this state" for section 6388 even when the factory manufacturing the trucks or trailers was in California.

The purchaser still had to be a nonresident. The letter treated a purchaser actively engaged in business in California as a resident for this exemption, relying on the factual-abode reasoning applied to the aircraft exemption in Garrett.

Citations and references

• California Revenue and Taxation Code sections 6366 and 6388 (as cited)
• Garrett Corp. v. State Board of Equalization, 189 Cal.App.2d 504 (as cited)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/580-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/580-0440.pdf

Original ruling text

580.0440

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
November 18, 1963

Gentlemen:
We regret the delay in responding to your letter of September 27, 1963. It is our opinion that a factory branch located in another state may be considered as the “dealer located outside this state’ within the meaning of section 6388 of the Sales and Use Tax Law even though the factory itself is located in California. The question of who is not a resident of California within the meaning of the section turns upon whether the purchaser is actively engaged in business in this state. Anyone so engaged is not considered to be a nonresident for purposes of this section. In this respect we are guided by the decision in Garrett Corp. v. State Board of Equalization, 189 Cal. App. 2d 504, construing the term “resident” in another exemption section, section 6366 dealing with aircraft. The courts held that out-of-state corporations doing a substantial business in California were not nonresidents due to the fact that they had a factual abode of some permanency in this state. We believe similar principles should be applied in interpreting section 6388.

Very truly yours,

E. H. Stetson
Tax Counsel
EHS:fb
cc:

Downey – Subdistrict Administrator