Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 330.3680


330.3680 Out-of-State Use of Leased Vehicle. A resident of New York leased an automobile from a New York automobile dealer. Under New York law, the lessor is required to pay New York sales tax "up front" on the full purchase price of the vehicle. Two years after leasing the vehicle, the lessee moved to California and continued to lease the vehicle.

Since the lessor did not purchase the vehicle for use in California (did not enter this state within 90 days), the lessor owes no use tax on its use of the vehicle in California. [See note below.] Therefore, it may not elect to pay tax to California measured by the purchase price and take credit for tax paid to another state as provided by section 6406. Since no California tax has been paid on the purchase price, the lease is a continuing sale and the rental payments are subject to use tax. 12/7/93. (Am. 2006–1; Am. 2008–1).

(Note: For the period October 2, 2004 through June 30, 2007, under certain conditions any vehicle, vessel, or aircraft purchased outside of California and brought into the state within 12 months from the date of its purchase is presumed to be acquired for storage, use, or other consumption in California and subject to use tax.) (Regulation 1620(b)(5).)