Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
570.0000 USE OF PROPERTY IN STATE AND USE TAX GENERALLY
(h) CREDIT FOR TAX IMPOSED BY OTHER JURISDICTIONS
570.1670 Ninety-Day Rule. A person purchases tangible personal property outside California, paying tax reimbursement or tax with respect to the purchase in the state of purchase. The buyer leases the property outside the state for more than 90 days and then brings the property into California for lease in this state. The buyer claims a credit for the tax reimbursement or tax paid in the other state, intending to collect and pay use tax on rental receipts.
The lease of the property outside the state for more than 90 days creates a presumption that the property was not purchased for use in this state. The presumption could be rebutted by the buyer and the buyer would then be entitled to a credit against his or her own California tax liability. However, where tax is paid on rental receipts, the tax is a use tax on the lessee. Since there is no tax liability of the buyer, there is nothing against which to apply a credit for the out-of-state tax or reimbursement which was paid by the buyer. 1/21/69.