Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(e) SALES AND LEASEBACK TRANSACTIONS
330.5019 Certificate Has No Value. Section 6010.65 does not provide that an exemption certificate obtained from a seller/lessee attesting that the conditions are met will relieve a purchaser/lessor from possible liabilities if it is found that the conditions were not met. In the event that the conditions of section 6010.65 are not met, no exemption exists and the application of tax is governed by Regulation 1660. A sale/leaseback transaction which does not meet the conditions specified in the statute is not exempt from tax. The lessor, in such a transaction, is liable for any taxes due measured by rental receipts unless he purchased the property tax paid or reported tax timely measured by the purchase price. It is immaterial whether he holds an exemption certificate issued by the seller/lessee.
The adoption of a sale and leaseback certificate is not appropriate since it would have no real value. It would not provide proof that the conditions of section 6010.65 of the Revenue and Taxation Code have been met. Further, it would not relieve the holder of the certificate of possible liabilities if the certificate is not factual and could conceivably mislead a lessor into not collecting tax on a taxable lease. 10/29/90; 5/20/96.