Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2012
 

Sales And Use Tax Court Decisions


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C

Current, Inc. v. State Board of Equalization . . . (1994)

Use Tax Collection Duties Imposed Upon Out-of-State Retailer Owned by Company Engaged In Same or Similar Business Held Unconstitutional

Plaintiff was an out-of-state mail-order company whose only connection with customers in California was by common carrier or United States mail. The plaintiff was acquired by a corporation who was a retailer engaged in business in California. The Board regarded plaintiff as a retailer engaged in business in California required to collect use tax under subdivision (g) of Revenue and Taxation Code section 6203.

The court of appeal held that the mail-order company was immune from the duty to collect use tax under the Commerce Clause, and its acquisition by a company engaged in business in California did not render it liable for collecting the tax. The plaintiff and the acquiring company did not have integrated operations or management, were organized and operated as separate and distinct corporate entities, and neither was the alter ego or agent of the other for any purpose. The plaintiff did not have sufficient physical nexus with California to justify the imposition of the duty to collect use tax, and, as applied to the plaintiff, the statute was unconstitutional as violative of the Commerce Clause. Current, Inc. v. State Board of Equalization (1994) 24 Cal.App.4th 382.