Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 465.1500


465.1500 Shortened Statute of Limitation—Section 6487.05. A retailer located out of state ships all property from its out-of-state location directly to customers by common carrier. The retailer has maintained a sales office in California for several years. The retailer was not familiar with the California Sales and Use Tax Law and included an indemnification clause in its contracts that the buyer is responsible for any sales or use tax. For this reason, it has not obtained a California seller's permit.

The taxpayer's inquiry relates only to the first requirement of section 6487.05, that the retailer be located outside this state. The provisions of section 6487.05 are intended to apply to retailers whose only liability was for failing to collect and remit use tax to the Board. Under these circumstances, if the retailer's only liability is incurred under sections 6203 (collection of use tax) and 6204 (use tax required to be collected is a debt of the retailer), the retailer is regarded as located outside the state even though it has a sales office in California. Therefore, if all sales made by the out-of-state retailer to California customers occur outside California, and the retailer does not owe any sales tax, the retailer is regarded as located outside this state for purposes of section 6487.05. However, if the retailer incurs any sales tax liability, the Board will not regard it as located outside this state for purposes of section 6487.05, and the retailer will not qualify for the shortened statute of limitations period provided by that provision. 3/21/95.