Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
570.0000 USE OF PROPERTY IN STATE AND USE TAX GENERALLY
(h) CREDIT FOR TAX IMPOSED BY OTHER JURISDICTIONS
570.1623 Credit for Tax Imposed by Other States. A vehicle is leased in a state that imposes on the lessor a tax that must be paid upon the inception of the lease and there is no indication that the lessee paid tax reimbursement to the lessor. The vehicle is relocated to California by the lessee. Unless the lessor has paid California use tax or California sales tax reimbursement, a "purchase" as defined in section 6010(e)(5) results. When a lease is a purchase, California tax applies measured by rentals payable for the period during which the vehicle is located in this state. The applicable tax is the use tax which is due from the lessee, although it must be collected and paid by the lessor. No credit for tax the lessor paid to another state is allowable against the lessee’s use tax liability in this situation because section 6406, which authorizes such credit, allows it only in situations in which the lessee paid tax or tax reimbursement to another state. Where the other state's tax is imposed on the lessor, the credit is not allowable, unless the lessee pays the lessor tax reimbursement with regard to the eligible lease payments, since the California use tax is imposed on the lessee 8/15/90.