Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 465.0110


(2) Claims for Refund

465.0110 Claim for Refund. Taxpayer filed a timely claim for refund of taxes voluntarily paid in 1987 on rental receipts from an aircraft it had purchased ex-tax in 1985, leased back to the seller, and then resold two months later, subject to the existing lease. The taxpayer's 1987 payments were not timely for a purchase made in 1985, and thus did not constitute an election to report tax based on fair rental value even though the payments were measured by rental receipts. The amount of tax paid was clearly less than the amount due on the purchase of the aircraft, and tax was due on the purchase price.

Even though the Statute of Limitations prevented the Board from assessing the remainder of the tax on the 1985 purchase, no refund is due on tax paid erroneously measured by rental receipts. Any claim will be denied based on Owens Corning Fiberglass Corp. v. State Board of Equalization (1974) 39 Cal.App.3d 532. The court upheld the Board in that case because at the time of payment the Board had the right to issue a deficiency assessment, even though it did not do so, and the amount of tax owed was greater than the amount paid. Thus, there was no overpayment to be refunded. 12/26/90.