Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Uniform Local Sales and Use Tax Annotations


Annotation 702.0285

702.0285 Fees on Airport Rental Car Operations. Sacramento County imposes a fee on rental car companies on the grounds of the Sacramento International Airport and on off-airport rental car companies.

The fees exacted from on-airport providers are by contract rather than ordinance. Therefore, since the obligation to pay fees is created by contract between the airport and the provider, the fees are not taxes at all. (Perry v. Washburn (1862) 20 Cal. 318, 350.) Therefore, these fees collected from on-airport providers do not conflict with Sacramento County's local sales and use tax ordinance.

The fees collected from off-airport providers, however, are imposed by Sacramento County Code Ordinance Chapter 11.09. The rate set by resolution is 10 percent of gross receipts, but only those generated by airport-related customers. The resolution exempts from the measure of the fee the first $12,500 per month of gross receipts. Neither the resolution nor Chapter 11.09 provides that the rental company may collect reimbursement for these fees directly from the customer. Also, the rental car companies do not separately pass the fees through to their customers.

Based on the California Supreme Court case Weeks v. City of Oakland, the fee on off-airport car rental companies is exactly what it says it is: a fee imposed on rental car companies located outside the Airport for the privilege of coming onto its property to rent cars to customers. The resolution makes it clear that a primary consideration for the fee is to prevent off-site operators from having an unfair advantage over on-airport operators and to provide the latter a disincentive to move off the Airport when their contracts come up for renewal. As the incidents of the fee indicate that it is not sales or use tax, the fact that it is measured by gross receipts does not convert the fee into a use tax. The lack of a pass-through feature is also highly important. Thus, the fee is not substantially similar to a sales or use tax and so is not effectively "preempted" by the State under section 7203.5. 11/22/96.