How did California calculate whether a fishing vessel was used principally outside state territorial waters?

Plain-English summary

California measured principal use across actual fishing operations, including sailing time to and from the fishing grounds. The vessel's outside-territorial-waters time is compared with its inside-water time; outside time must be greater for principal use to be outside California waters.

Time spent stored or idle in California is not part of that operational calculation.

A 1993 memorandum changed the annotation's first sentence to clarify the computation. The PDF also preserves the 1951 opinion on which the rule is based.

That 1951 opinion separately said a Los Angeles-to-Catalina water-taxi trip was not interstate or foreign commerce merely because of the route. It left open whether through tickets or continuous freight arrangements could make the island segment part of a larger interstate journey.

What this means for you

Commercial fishers, charter operators, and tax advisers

Maintain logs separating travel and fishing time inside and outside California territorial waters. Exclude genuine storage and idle periods, and document any continuous interstate ticketing or freight arrangement separately.

Common questions

Q: Does travel to and from fishing grounds count?

A: Yes, as part of actual fishing operations.

Q: Does California storage or idle time count?

A: No.

Q: What comparison determines principal use?

A: Time outside California territorial waters must exceed time inside those waters.

Citations and references

• California Revenue and Taxation Code § 6368
• California Sales and Use Tax Ruling 51.5, as cited in the source

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 600.0260
• Original supporting opinion: 600.0260 PDF

Original ruling text

600.0260

State of California

Board of Equalization

Legal Division

Memorandum
I\

1

To

Ms. Shirley Johnson
Audit Evaluation and Planning

From

Donald L. Fillman
Tax Counsel

Subject:

Annotation 600.0260

Date:

January 15, 1993

When we last met, we discussed the need to change Annotation 600.0260. The first sentence is not accurate and should be replaced with the following new first sentence: The total time spent outside the territorial waters of this state is deducted from the total time spent in all of the actual fishing operations, including the sailing time to and from the fishing grounds.

DLF:wk
800<0280_,nem

•

Mr.

(PER)

I
600.0260

March 16, 1951

Ruling 51.5

Apparently the reason your memo of January 4 was not answered was because we discussed the matter in Los Angeles on April 3 or thereabouts, according to the notation placed on the memo of that date regarding

In answer to your question as to what constitutes the "principal use" of the watercraft with respect to operations outside the territorial waters of this State, it is our opinion that probably the total time spent in actual fishing operations, inclusive of the time spent traveling to and from the fishing grounds, should be divided into the time spent outside the territorial waters of this State and the time spent within those waters. If the time spent outside the waters is greater than the time spent within the waters, it is principally used outside the territorial waters of the State. We do not think that the time the watercraft may be in storage or idle in the State should be considered in determining the place of principal use.

You also ask whether a water taxi making trips, £er example, from Los Angeles harbor to Avalon, Catalina Island, would be regarded as operating in interstate or foreign commerce. In our opinion such a journey is not interstate or foreign commerce and thus these water taxies, by virtue of this journey or similar journeys are not used in interstate or foreign commerce within the meaning of Section 6368 and Ruling 51.5. In this connection I might mention that last summer when I was in Catalina I discussed with Mr. REDACTED TEXT the possible application of use tax with respect to a vessel that had been purchased by the company in the east and which was to be brought to California for use between the mainland and the island in the winter months. Mr. REDACTED TEXT is familiar with this matter since it was at his suggestion that I contacted Mr. REDACTED TEXT who had previously discussed the question with Mr. REDACTED TEXT. It appeared that the question turned upon whether the trip between the island and the mainland could be regarded as a part of a continuous interstate journey originating or ending at some point outside this State. This in turn would depend upon whether passengers from outside the State could buy a through ticket to the island, or vice versa, or whether freight could be shipped to or from the island in like manner. Unless such arrangements were permissible, it seems -that the trip from the island to the mainland, or vice versa, was merely a side trip and not a part of any interstate journey commencing outside this State and ending at the island or commencing at the island and ending outside the State.

REDACTED TEXT was going to write to me, supplying information concerning the matter of through tickets and other factors pertinent to determining whether the island trip could be regarded as a part of an inter­state commerce journey, but I have not heard from him. Perhaps the tax was paid or for some reason the question has become moot.

The only basis for exemption would, of course, be §6368 and Ru1ing 51.5 since the use tax would quite clearly apply with respect to the vessel upon its being brought to this State since there would, upon completion of that journey, be a taxable storage or use made prior to placing the vessel in the island's service.