Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Transactions and Use Tax Annotations

800.0000 APPLICATION OF TRANSACTIONS (SALES) TAX AND USE TAX—Regulation 1823

Annotation 800.0031

800.0031 Place of Sale, Delivery, and Use. Purchased computer equipment is delivered to the purchaser's warehouses located in Alameda and Orange Counties. At the warehouses, the equipment is inventoried, tested, or burned in, reconfigured if necessary, and stored at the warehouses for not more than 15 to 30 days before being shipped by the purchaser, in its own facilities, to its final destination. Tax applies in the following situation as follows:

(1) The negotiations and contract signing takes place in the San Francisco office of the seller which has more than one office in California. The equipment is delivered to the purchaser's warehouse in Alameda County but is destined for use in Contra Costa County. In this situation under Regulation 1822, the place of sale is the BART district, which includes the counties of San Francisco, Alameda, and Contra Costa Counties. The ½% BART district transaction tax applies to the sale in addition to the uniform state and local sales tax. Since the seller delivered the equipment to the purchaser's warehouse in Alameda County, the ½% district transactions and use tax imposed by the Alameda County Transportation Authority also applies in addition to the BART transaction tax. The exemption for use out of state or out of the district, Regulation 1823(b)(2)(A), does not apply since the purchaser will not ship the equipment out of Alameda County for use solely outside any district imposing the tax.

(2) The principal negotiations and contract signing take place in the Los Angeles office of the seller, but the seller's Oakland office participates in the sale, but only to a limited extent. The equipment is delivered to the purchaser's warehouse in Orange County but ultimately is destined for use in San Francisco. In this situation, the BART district use tax applies to this sale. While the seller did not deliver the property into the BART district, nevertheless, the seller's Oakland office has some participation in the sale and the seller, therefore, has an obligation to collect the BART district use tax pursuant to Regulation 1827(b)(1). The Los Angeles County transactions tax does not apply since the seller, pursuant to the contract of sale, delivered the property outside of that district.

(3) The negotiations and contract signing take place in the New York office of the seller which has multiple offices in California. The equipment is delivered to the purchaser's warehouse in Alameda County but ultimately is destined for use in branches throughout California. If the seller ships the equipment from a point outside of California, so that the transaction is subject to state use tax, rather than state sales tax, the Alameda County district use tax and the BART district use tax do not apply to this transaction under Regulation 1823(b)(2)(A) for equipment which is delivered by the purchaser to be used solely in branches located outside of any transit district in California. However, where the purchaser ships the equipment to its branches located within any district in California which imposes a use tax, the exemption provided by Regulation 1823(b)(2)(A) does not apply, and both the BART district use tax and the Alameda County district use tax would apply. The seller is obligated to collect the district use taxes from the purchaser if it is engaged in business in both the Alameda district and the BART district. (4) The negotiation and contract signing with the retailer, who is not engaged in business in California, take place at the purchaser's New York office. The contract is approved at the retailer's home office in Illinois. The sales contract provides that equipment is sold F.O.B. shipping point and is transported by common carrier from Illinois to the purchaser's warehouse in Alameda County. The equipment is ultimately destined for use in Contra Costa County. The tax applicable in this situation is a use tax payable to the Board by the purchaser. Since the place of delivery is Alameda County and the equipment will not be shipped from Alameda County to a point outside of any district imposing a use tax, the exemption provided by Regulation 1823(b)(2)(A) would not apply. The applicable taxes are the BART district use tax, the Alameda County district use tax, and the uniform state and local use taxes. 2/25/88.