Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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C. R. Fedrick, Inc. v. State Board of Equalization . . . (1974)

Classification of Property Used in Contracts with the United States Government

Plaintiff was a subcontractor to the prime contractor, the United States Corps of Engineers, under contract to furnish and install certain alterations and improvements of airfields and air navigation equipment at California airfields. Tax was imposed on plaintiff under Revenue and Taxation Code sections 6094, 6202, and 6384 for its use of various items of tangible personal property in the performance of its contract to improve real property for United States Government.

The Court of Appeal held that California had the constitutional power to impose sales and use taxes on contractors in relation to work performed at federal facilities located in California because Congress had expressly consented to such tax and had thereby waived the sovereign immunity of the United States. The court found that while California had generally exempted from the sales tax gross receipts from the sale of tangible personal property to the United States, the state taxed tangible personal property "for use in the performance of contracts with the United States for the construction of improvements on or to real property in this state." (Rev. & Tax. Code §§ 6381, 6384.) C. R. Fedrick, Inc. v. State Board of Equalization (1974) 37 Cal.App.3d 564.