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 570.1623

(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. 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 paid to another state is allowable in this situation because section 6406, which authorizes such credit, allows it only in situations in which the tax of both states has been paid by the same person. Where the other state's tax is imposed on the lessor, the credit is not allowable since the California use tax is imposed on the lessee.

Even if the other state's law permitted the tax to be paid on rentals, no offsetting credit would be allowed unless the other state required that tax payments continue to be made while the vehicle was in California. If such tax is imposed while the property is in California, a section 6406 credit is available for the period the vehicle is in California. 8/15/90.