Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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135.0000 BANKS AND INSURANCE COMPANIES—Regulation 1567

Annotation 135.0350

135.0350 Sales to Insurance Companies. The California Supreme Court has overruled a previous court decision and held that the "in lieu" provision of section 28(f) of Article XIII of the California Constitution (which provides that the gross premiums tax on insurance companies is in lieu of all other taxes) applies to all activities of an insurance company, (Mutual Life Ins. Co. of New York v. City of Los Angeles (1990) 50 Cal.3d 402.).

However, this decision does not apply to sales which are made to an insurance company by a retailer located within California. The sales tax is a tax on the retailer, not on the purchaser, even if the retailer collects sales tax reimbursement from the purchaser. Therefore, an insurance company is not paying a tax when it pays sales tax reimbursement to the retailer, and the "in lieu" provisions considered in the above court case do not apply. 6/12/90.