Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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475.0000 RESALE CERTIFICATES—Regulation 1668

Annotation 475.0169.200

475.0169.200 Resale Certificates—Item Consumed and Resold. A California taxpayer distributes name brand eyewear to a network of authorized dealers. All products that it sells are noncorrective through the time of sale and delivery to the dealers. The taxpayer does not provide prescription lenses and does not make, buy, or sell corrective lenses. The eyewear is shipped with either sun or plano lenses. The frames sold with plano lenses may or may not be used for prescription purposes. Some dealers make specialized sun or safety lenses to be installed into the frame (therefore they purchase the frames with the less expensive plano lenses).

The taxpayer cannot determine which items are to be used by the dealer for corrective purposes and which will not. Often the dealers themselves do not know at the time of purchase.

Under this scenario, a dealer who purchases a lot of items knowing that some will be resold and some consumed but who, at the time of purchase, cannot in good faith determine which specific items will be resold and which will be consumed, may issue its vendors a resale certificate for the whole lot. The buyer would then be responsible for self reporting use tax on the items consumed. 10/17/95.