Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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U

570.0000 USE OF PROPERTY IN STATE AND USE TAX GENERALLY

Annotation 570.1140

(d) EXCLUSIONS

570.1140 Material Withdrawn from Inventory for Use Outside California. An in-state company has agreements with two out-of-state firms for the collection of blood plasma for the company. The original purchase order indicates that the in-state company will supply disposable blood-collecting equipment for $6.00 and $6.60 per set. An amended purchase order provides that the in-state company will furnish the equipment to the firms without charge.

The out-of-state firms are not authorized to use the equipment furnished by the in-state company when collecting plasma which is not being sold to the company. Also, title to the equipment furnished by the in-state company for no charge is retained at all times in the in-state company. Accordingly, the company does not sell such equipment to the out-of-state firms pursuant to a sale in interstate commerce.

Notwithstanding the above, the company's withdrawal of such equipment from resale inventory for its own use outside this state constitutes the exercising of power over tangible personal property in this state for the purpose of subsequently transporting it outside this state for use thereafter solely outside this state. Such exercise of power over tangible personal property is not a use subject to tax. (Section 6009.1.) 1/31/66.