Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
325.0000 INTERSTATE AND FOREIGN COMMERCE—Regulation 1620
(c) SHIPMENTS FROM CALIFORNIA TO POINTS OUTSIDE STATE
325.1097 Continuous Journey. In McDonnell Douglas v. SBE (1992) 10 Cal.App.4th 1413, the goods were shipped to an export packer. However, the buyer's employees actually prepared the property for export at the packer's location. The court apparently found the distinction to be immaterial in ruling that the goods had entered the export stream. In the case of the Rice Growers Association of California v. Yolo County (1971) 17 Cal.App.3d 227, Cert. Din., 404 U.S. 941, the court held that shipment of property to a collection point of the buyer did not constitute the entering of the property into a continuous journey to a foreign destination.
When goods are sold and shipped to a water carrier which consolidates the property for later shipment for its own use at a foreign destination, the property has not entered the stream of foreign commerce. While the fact that buyer's employees did the packing may be immaterial, the Rice Growers Case, rather than the McDonnell Douglas case, is applicable. The shipment of property to a collection point does not begin a continuous journey to a foreign destination. 6/7/94.