Were a nonresident's new semi-trailer and truck tractor exempt when loaded with interstate goods and removed from California within 30 days?

Plain-English summary

A nonresident planned to buy a new semi-trailer and truck tractor through a California dealer, take delivery directly from the California manufacturer, load the trailer only with interstate-commerce goods, and remove both units from California within 30 days. Each unit weighed more than 6,000 pounds unladen.

Counsel concluded that the semi-trailer sale and purchase were exempt on the stated facts. Carrying a load during the trip out of California did not defeat the trailer result. The letter assumed that any later California return would also involve only interstate-commerce goods.

The truck tractor was different. The cited legislative amendment did not cover truck tractors, and the in-state dealer purchase did not satisfy section 6388, so its sale was subject to California sales tax.

The letter also warned that California-based proportional registration would defeat section 6388's nonresidency requirement, although it would not affect the separate trailer exemption described under the legislative amendment.

What this means for you

Nonresident commercial carriers buying equipment in California

Trailer and tractor could receive different treatment in the same transaction. Loading interstate cargo did not itself disqualify the trailer exemption.

Accountants and tax professionals

Analyze each unit separately and verify residency, seller and delivery path, removal timing, weight, registration base, cargo, and any later California use.

Common questions

Q: Did carrying cargo on the outbound trip defeat the trailer exemption?

A: No, when the cargo was entirely in interstate commerce and the other assumptions were met.

Q: Was the truck tractor also exempt?

A: No. The letter said the truck tractor did not satisfy section 6388.

Q: How quickly did the buyer plan to leave California?

A: Within 30 days of delivery.

Q: What registration fact could defeat section 6388?

A: California-based proportional registration, because of the nonresidency requirement.

Citations and references

• California Revenue and Taxation Code § 6388
• Assembly Bill 1020, as described in the letter
• Garrett Corporation v. State Board of Equalization (1961) 189 Cal.App.2d 504

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 585.0290
• Original supporting opinion: 585.0290 PDF

Original ruling text

585.0290

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
September 30, 1971

Dear Mr. ______,
Your letter of September 17, 1971 directed to Mr. H. A Dyer requesting a legal opinion concerning the transaction set forth below has been referred to us for reply. We understand that in the near future you are going to purchase a new semi trailer and a new truck tractor “at a California point”. We assume, from the quoted section, that you mean that you will contract with a California dealer for such purchase and take delivery of the units directly from the California manufacturer. You plan to load the semi trailer with nothing but interstate commerce goods and remove it with the truck tractor from this State within thirty days from the date of delivery. You further state that the units are more than 6,000 pounds unladden weight, and that you are not a resident of the State of California; however, in this regard we would suggest that you read the case of Garrett Corporation v. State Board of Equalization, 189 Cal. App. 2d 504, which goes into the matter of who is a resident. In regard to the purchase, delivery, removal, and use of the semi trailer, it is our opinion that under the foregoing facts that the sale and purchase would be exempt from California sales and use tax. This conclusion is based upon the further assumption that the trailer, if it ever returns to California, will be carrying nothing but interstate commerce goods. As to the truck tractor, it is our opinion that the sale will be subject to California sales tax. It is to be noted that the amendment of AB 1020 does not cover “truck tractors”. Accordingly, since we understand that you will purchase the vehicle from an in-state dealer the exemption provided for in Section 6388 will not be complied with. It is to be noted that California-based proportional registration will result in the loss of the exemption under Section 6388 because of the nonresidency requirement. On the other hand, California-based proportional registration will not effect the exemption provided by AB 1020. Very truly yours,

Glenn L. Rigby
Tax Counsel
GLR:lb