Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 290.0080

290.0080 Replacement Parts. A California concern purchases equipment out of state, which is shipped "freight collect" with risk of loss to be on the purchaser. During shipment certain parts were broken beyond repair. These parts were reordered and billed to purchaser including sales tax.

Assuming title passed to purchaser out-of-state, use tax liability accrues to purchaser. Since part of the shipment was damaged, the tax would be due only on that portion of the total amount paid represented by the fair retail value of the goods in their damaged condition. The replacement parts are properly subject to either sales or use tax. 2/21/55.