Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 290.0025

290.0025 Equipment Badly Damaged in Transit. A California firm agreed to purchase certain equipment from a California vendor. The vendor ordered the equipment from an out-of-state firm. The invoice from the vendor to the purchaser stated "FOB Vermont." The equipment was badly damaged in shipment and, upon inspection at the carrier's terminal, delivery was refused. The purchaser filed a claim with the carrier, which paid the full amount, less tax.

Title to the equipment was intended to pass to the purchaser at F.O.B. point outside the state and, therefore, the purchase from the California vendor was a use tax transaction. This is supported by the fact that the purchaser, rather than the vendor, filed a claim against the carrier. Accordingly, the use tax does not apply with respect to goods destroyed before the purchaser makes any storage or use of them in this state. Therefore, the purchaser may file a claim for refund of use tax collected from it by the vendor. 3/3/64.