Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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U

570.0000 USE OF PROPERTY IN STATE AND USE TAX GENERALLY

Annotation 570.1655

(h) CREDIT FOR TAX IMPOSED BY OTHER JURISDICTIONS

570.1655 Indian Tribal Tax. A California resident (in this case, a non-Indian or an Indian not living on a reservation) purchased an automobile from an automobile dealership located on an out-of-state Indian reservation. The automobile was brought into California for use in this state. The purchase price of the automobile included an Indian tribal tax identified on the sales contract as a sales tax. The California resident was informed, presumably by the dealership, that a credit for the tribal tax was allowable under Revenue and Taxation Code section 6406, against his or her California use tax liability.

The tribal tax shown on the dealership's sales contract is identified as a sales tax defined by the out-of-state statute as a tax imposed on the retailer for the privilege of selling tangible personal property on the reservation. The tribal tax paid by the purchaser to the dealership is reimbursement to the retailer for sales tax that the retailer must pay to the Indian tribe. The tribal tax is a cost of acquiring the vehicle and is included in the measure of the California use tax. (Revenue and Taxation Code section 6011(a)(1).)

Furthermore, under section 6406, a credit against California use tax for tax paid to another state is allowable only when such sales and use tax is imposed by a state or a political subdivision of a state. The Indian tribe is not a political subdivision of the state. The tribe imposes the tribal tax based on its retained sovereignty subject to limits imposed by federal law. Therefore, the purchaser is not entitled to a credit against its California use tax liability for payment of the tribal tax. 4/5/05. (2006–1).