Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
(e) TAXES AND FEES (GOVERNMENTAL)
295.1270 Property Taxes. If a purchaser is required to reimburse the seller for the property taxes the seller paid as part of the contract of sale, the amount paid to the seller is included in the measure of tax. Personal property taxes are assessed in California as of March 1 of each year. Although the actual bills for the tax are issued after March 1, the person owing the tax is the person who is the owner of the property as of the assessment date, March 1. It is the assessment date that determines the person liable for the tax, not the date on which the bills for that tax are issued. This means that if the seller owned the equipment in question on or after March 1 of the year of sale, the seller is the person owing the personal property taxes. The purchaser was not liable for payment of the tax to the taxing body. Thus, the purchaser would have reimbursed the seller for the seller's payment of the taxes as part of the sales price of the equipment, and such amount would be includable in the taxable measure.
On the other hand, if the sale occurred prior to March 1, meaning that the purchaser owned the equipment as of March 1, then the purchaser was the person legally owing the tax to the taxing body. If such were the case, the amount the purchaser reimbursed the seller for payment of its tax liability would not be included in taxable measure. 12/29/94.