Was tax refundable when California residents bought a car in Oakland, took delivery in Italy, used it there for five months, and later brought it home?

Plain-English summary

California residents bought an automobile at an Oakland business in 1968 but arranged delivery in Milan, Italy. The seller collected $98.85 described as sales tax and a $35 California registration fee. Delivery occurred June 14, and the car did not enter California until November 12.

Counsel said the residents' roughly five months of bona fide use outside California rebutted the presumption that the vehicle was bought for California use. The seller was therefore relieved of its use-tax collection duty, and the sales-tax reimbursement had been collected in error.

Paying the California registration fee at purchase did not change the conclusion. Under the historical 90-day rule, the foreign delivery and use period controlled whether the California-use presumption applied.

The seller's refund claim should be granted on condition that the refunded amount was returned to the buyers.

What this means for you

California residents taking foreign delivery

Registration-related payments did not outweigh actual extended foreign delivery and use under the historical rule.

Accountants and tax professionals

Preserve purchase invoices, delivery records, foreign use evidence, travel dates, registration payments, California entry dates, and proof that any refund reaches the customer.

Common questions

Q: Where and when was the car delivered?

A: Milan, Italy, on June 14, 1968.

Q: When did it enter California?

A: November 12, 1968.

Q: How much tax reimbursement had been collected?

A: $98.85, plus a separate $35 vehicle registration fee.

Q: Did the registration fee defeat the refund?

A: No.

Q: Who ultimately had to receive the refunded tax?

A: The buyers, as a condition of granting the seller's refund claim.

Citations and references

• California Revenue and Taxation Code §§ 6203, 6247, and 6248
• Historical Annotation 1916.10, as discussed in the memorandum

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 585.0320
• Original supporting opinion: 585.0320 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

585.0320

To:

Petition Unit (FJT)

From:

Tax Counsel (TPP:GJJ) - Headquarters

Subject:

______

Date:

April 3, 1969

This is in further reply to your memo dated January 9, 1969 concerning the propriety of the claim for refund filed by the above-mentioned taxpayer. Restating the facts, "B" made a sale of an automobile at its Oakland place of business in 1968 to Mr. & Mrs. "M", California residents who resided at "C", Berkeley. The delivery of the automobile was to be made at Milano, Italy. "B"'s invoice included charges of $98.85 (sales tax) and $35 (vehicle registration fee) which were collected from the "M"'s. Delivery of the automobile was made in Milano on June 14, 1968 and the automobile entered California on November 12, 1968. In our memo to you dated February 24, 1969, we advised that the section 6247 presumption arose at the time of sale and that "B" became responsible for the collection of use tax from "M" pursuant to the provisions of section 6203. However, as the "M”s took delivery of the automobile approximately 5 months before they returned to California and had made a bona fide use of it outside of California, we regarded this evidence as rebutting the presumption of section 6247, thus relieving "B" of its obligation to collect use tax on this sale. We concluded that since sales tax reimbursement had been erroneously collected at the time of the sale and paid to the Board, "B”’s claim for refund should be granted subject to the condition that the refund be returned to the "M'" s. In so concluding, we did not take into consideration the fact that in addition to paying sales tax reimbursement, the “M”s also paid the vehicle registration fee. You ask whether this fact would alter the conclusion reached in our February 24 memorandum. The fact that the “M”s paid the vehicle registration fee does not alter the conclusion reached in our February 24 memo. In annotation 1916.10 we held that a purchaser of a vehicle outside the state was not liable for the California use tax on the vehicle unless he brought it into the state 90 days or less from the date he received out-of-state delivery. The vehicle was deemed not to have been purchased for use in this state when it was not brought into this state until over 90 days from the date of its purchase and delivery. As you will observe, the date of this anno. is February 27, 1959, while section 6248 of the Code, which refers specifically to a 90-day period, was not enacted until 1963. Thus, prior to the addition of section 6248, whether tax applies to

the vehicles delivered outside the state was dependent upon whether the vehicle was brought into California 90 days or less from the date of delivery. In view of the fact that the application of the presumption in cases involving vehicles has been dependent solely upon the 90-day period in determining whether the presumption of purchase for use in California will apply. As the “M”s used the vehicle for 5 months outside the state prior to bringing the vehicle to California, we conclude that the vehicle was not purchased for use in the state for purposes of section 6247 as well as for the purposes of section 6248.

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