Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
505.0000 SALES TO THE UNITED STATES AND ITS INSTRUMEN-TALITIES—Regulation 1614
(e) MEDICARE PROGRAM
505.0850 Federal Contractors. Corporation A makes sales of tangible personal property to Corporation B. The property is shipped from within California to Corporation B in California. Corporation B has a contract with a federal agency to perform unspecified tasks on an island in the Pacific Ocean. Corporation B ships the property to the island. Corporation B claims that no tax is due on the transactions but specifically states that the property is not purchased for resale to the U.S. government. The sales are therefore at retail and subject to tax.
The sales are not exempt sales in interstate commerce because the property is delivered to the buyer in this state. The sales are not exempt sales to the U.S. government because federal contractors are not regarded as agents of the U.S. government (see United States v. New Mexico (1972) 455 U.S. 720). 7/25/94.