Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 290.0028

290.0028 Goods Damaged or Lost in Transit After Retail Sale. Sales tax otherwise due is not reduced or eliminated when the goods are damaged or lost in transit after the retail sale. "Sale" means any of the events defined in section 6006, including the transfer of title to the goods. If the title to the goods being sold passes from the California seller to the California buyer before the intrastate transportation from the seller to the buyer, and the goods are totally destroyed during the transportation to the buyer, the seller owes the same full amount of the sales tax as if the goods had been received undamaged by the buyer. The buyer still owes the seller for the destroyed goods' price including sales tax reimbursement. That outstanding debt is equivalent to the loss experienced by the buyer. The buyer will expect full compensation from the carrier who was responsible for destroying the buyer's goods. It should be noted that in some circumstances of interstate transportation from an out-of-state seller to a California buyer, the use tax would be applicable rather than the sales tax. In those cases, no use tax would be due if the goods were totally destroyed during the transportation and before any receipt of the goods by the buyer, whether or not the title to the goods had passed to the buyer. 6/24/80.