Which date controlled the use-tax rate when a vehicle transaction crossed the August 1, 1967 rate change?

Plain-English summary

Staff considered vehicle purchases crossing an August 1, 1967 tax-rate change. The key date for selecting the rate was the purchase date, not merely the order date or later registration date.

Possession and title normally passed together, so possession usually controlled. A purchaser could establish an earlier title date with evidence such as a bill of sale, payment check, or conditional sales contract, although those documents were not automatically conclusive.

For an out-of-state vehicle already registered to the taxpayer and entering California before August 1, entry itself proved that title had passed before the rate change.

Counsel separated two questions for out-of-state purchases: whether any California tax was owed and which rate applied. The section 6248 purchase-for-use presumption counted from possession rather than title to prevent artificial early title passage from manufacturing a 90-day interval, even though the proven title date could still determine the rate.

What this means for you

Vehicle buyers near a rate change

Ordering, paying, taking title, receiving possession, entering California, and registering can occur on different dates. Each serves a different legal question.

Accountants and tax professionals

Preserve all transaction documents and analyze taxability separately from rate. Do not assume DMV registration date fixes either issue.

Common questions

Q: What date normally showed the purchase?

A: The possession date, because possession and title usually passed together.

Q: Could the buyer prove an earlier title date?

A: Yes, with evidence, though no single document was necessarily conclusive.

Q: Did the order date control?

A: No.

Q: Did title passage also start the 90-day section 6248 count?

A: No. The memorandum used possession for that presumption while using title passage for the rate.

Citations and references

• California Revenue and Taxation Code §§ 6201 and 6248

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 585.0220
• Original supporting opinion: 585.0220 PDF

Original ruling text

State of California

Board of Equalization

Memorandum
585.0220
To:

Compliance Planning Unit

From:

Tax Counsel (RHA)

Subject:

Rate of Use Tax on Vehicle Transactions On and After 8/1/67

August 1, 1978

Reference is made to your memo of July 24, 1967 in which you give the following examples of vehicle transactions: 1.

(In-state transaction) Vehicle purchased prior to rate change date and registered by the purchaser after August 1, 1967. If the purchaser received title prior to August 1, the rate would be 3 percent state and 1 percent local.

2.

(Out-of-state transaction) Vehicle purchased outside of California and entered California prior to August 1, 1967, but was not required to be registered in California until after August 1st. Tax rate is 3 percent state and 1 percent local.

3.

(Out-of-state transaction) Vehicle purchase outside of California prior to August 1, 1967 and entered California after August 1, 1967. If the purchaser received title prior to August 1, the rate would be 3 percent state and 1 percent local.

Generally speaking, the “key” to the tax rate in all vehicle transactions is the date of purchase. This should not be confused with the date an order is placed. Normally, possession and title go hand in hand, although not necessarily so. Some taxpayers will be able to show they received title before they took possession. In such cases the date the purchaser received title is controlling. If a purchaser cannot show he received title before he took possession, the date he took possession must be controlling. Dates on a bill of sale, check for payment, conditional sales contract, may serve as evidence of title passage, but they are not conclusive.

-2-

Aug. 4, 1967
585.0220

In the case of out-of-state purchases and out-of-state registration, we have no problem of proof of date when title passed. Obviously, entry into the state before August 1, 1967 of a vehicle registered to the taxpayer would be proof of title passage before August 1, 1967. The date of title passage should not be confused with decisions on whether the purchaser owes any tax at all. Two decisions must be made in the case of out-of-state purchases: (1) whether the purchaser owes any tax, and (2) what rate is applicable. In applying Section 6248 of the Sales and Use Tax Law, (presumption of purchase for use; motor vehicles), we have used the date of possession as a starting pioint to count the lapse of days before entry into California for use here. It would be relatively simple, for example, for a California resident to take title long before possession in order to show a lapse of 90 days before entry into the state, even though from the very day he took title he intended to use the vehicle for use in California and under Section 6201 of the law he is liable for use tax. However, the rate may be 4 percent instead of 4 percent if he took title before August 1, 1967.

RHA:dse

585.0220.doc

[1b]