Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2010

Sales And Use Tax Court Decisions

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Occidental Life Insurance Co. v. State Board of Equalization . . . (1982)

Incidence of the Sales Tax Is on the Retailer

Taxpayers were insurance companies who paid sales tax reimbursement on retail purchases of personal property for the years 1973 through 1976. During that time, California Constitution, Article XIII, SS14-4/5 (now Cal. Const. Art. XIII, Sec. 28, subd. (f)) and Revenue and Taxation Code Section 12204 restricted taxation of insurance companies to the imposition of the gross premium tax. Taxpayers brought a refund action and the trial court entered a judgment of dismissal.

The court of appeal affirmed, holding that the legal incidence of the retail sales tax is on the retailer and not the consumer, even though most often the real economic burden of the tax eventually falls on the consumer. Thus, the court concluded that neither the Constitution nor the statute forced the imposition of a sales tax on retail sales of personal property to insurance companies. Occidental Life Insurance Company v. State Board of Equalization (1982) 135 Cal.App.3d 845.