FAQ - 12 Month Test

The following questions and answers pertain to purchases of vehicles, vessels, and aircraft subject to the 12-month test provisions only. The information below does not apply to the purchase of a vehicle, vessel, or aircraft that is subject to the 90-day test provisions. To determine which test applies to your situation, please see the answer to question 1 below.

General Questions

  1. Do I use the 90-day test or the 12-month test when determining the application of use tax to out-of-state purchases of vehicles, vessels, and aircraft?
  2. What are the 12-month test provisions?

Binding Purchase Contracts

  1. What is a binding purchase contract?
  2. Which law applies if I have entered into a binding contract to purchase a vehicle, vessel, or aircraft during the period from July 1, 2007 through September 30, 2008, but delivery of the vehicle, vessel, or aircraft occurs after September 30, 2008?
  3. Which law applies if I have entered into a binding contract to purchase a vehicle, vessel, or aircraft during the period from July 1, 2008 through September 30, 2008, but the construction of the vehicle, vessel, or aircraft will not be completed until after September 30, 2008?

Questions for California Residents

  1. The vehicle, vessel, or aircraft I purchase on or after October 1, 2008 enters California during the first 12 months of ownership. Can I still qualify for an exclusion from use tax?
  2. I purchase a vehicle or vessel out of state on or after October 1, 2008, and register it with the California Department of Motor Vehicles (DMV). Can my purchase and use qualify for an exclusion from use tax if I do not bring the vehicle or vessel into California during the first 12 months of ownership?
  3. Am I considered a California resident if I maintain a residence in California and a residence in another state?
  4. A California resident purchases a vehicle outside of the state from a California dealer and represents to the dealer that the vehicle has not been purchased for use in the state (by completing and signing a BOE-447 and BOE-448). May the dealer accept the form and register the vehicle with the California Department of Motor Vehicles (DMV) without collecting the use tax?

Use in Interstate or Foreign Commerce

  1. The vehicle, vessel, or aircraft I purchase out of state on or after October 1, 2008 enters California during the first 12 months of ownership, and is used in interstate or foreign commerce. Can my purchase and use of the vehicle, vessel, or aircraft qualify for an exclusion from use tax?

Aircraft Used as a Common Carrier

  1. I purchase an aircraft for use in or for lease as a common carrier. Can my purchase and use qualify for exemption from tax if the aircraft is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

Commercial Deep Sea Fishing Vessel

  1. I purchase a vessel for use in commercial deep sea fishing. Can my purchase and use qualify for exemption from tax if the vessel is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

  1. Do I use the 90-day test or the 12-month test when determining the application of use tax to out-of-state purchases of vehicles, vessels, and aircraft?

    Revenue and Taxation Code section 6248 has been amended several times over the past several years resulting in two different applicable test periods. The test periods are used to determine if the out-of-state purchase of a vehicle, vessel, or aircraft was a purchase for the purpose of storage, use, or other consumption in California and subject to California use tax. The applicable test period is generally dependent upon the purchase date of the vehicle, vessel, or aircraft. The following table illustrates the application of each of the two test periods based on the purchase date:

    Purchase Date Test Period
    Prior to October 2, 2004 90-Day Test
    October 2, 2004 – June 30, 2007 12-Month Test
    July 1, 2007 – September 30, 2008 90-Day Test
    On or after October 1, 2008 12-Month Test

    Revenue and Taxation Code section 6248 was amended to replace the "90-day test" with a "12-month test" to determine whether the out-of-state purchase of a vehicle, vessel, or aircraft was a purchase for the purpose of storage, use, or other consumption in California and subject to California use tax.

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  2. What are the 12-month test provisions?

    For the period of October 2, 2004, through June 30, 2007, and on or after October 1, 2008, any vehicle, vessel, or aircraft purchased outside of California and brought into California within 12 months from the date of its purchase is presumed to be acquired for storage, use, or other consumption in California and subject to tax if that vehicle, vessel, or aircraft is:

    • Purchased by a California resident as defined in section 516 of the California Vehicle Code (Effective January 1, 2010, a California resident is defined to include a closely held corporation or limited liability company if 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California as defined in section 516 of the Vehicle Code.), or
    • Subject to California's vehicle registration, or aircraft and vessel property tax laws, during the first 12 months of ownership, or
    • Used or stored in this state more than one-half of the time during the first 12 months of ownership.

    Under any of the conditions described above, it is presumed that use tax will apply. However, if a purchaser provides satisfactory documentary evidence showing that the vehicle, vessel, or aircraft was purchased for use outside of California during the first 12 months of ownership, use tax will not apply. Acceptable evidence may include proof of registration of that vehicle, vessel, or aircraft, with the proper out-of-state authority. This documentation must be submitted to the Board of Equalization for evaluation.

    Binding Contract
    Revenue and Taxation Code section 6248 provides that the 12-month test provisions do not apply if a vehicle, vessel, or aircraft is purchased, or is the subject of a binding purchase contract that is entered into, during a time period when the 90-day test provisions were in effect (prior to October 2, 2004 and July 1, 2007 through September 30, 2008).

    Resident
    Vehicle Code section 516 provides in part that a "resident" means any person, including a natural person, firm, partnership, association, limited liability company, or corporation, who shows an intent to live or be located in California on more than a temporary basis. Effective January 1, 2010, a California resident also includes a closely held corporation or limited liability company in which 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California as defined in section 516 of the Vehicle Code. If you have a presence in California for six months or more in any 12-month period, we will presume you are a resident, as evidenced by factors including the address where you are registered to vote and the location of your place of employment or business.

    Limited Exclusions

    Repair, retrofit, and modification of aircraft and vessels
    An aircraft or vessel is not presumed to have been purchased for use in California, and is therefore not presumed to be subject to use tax, if the aircraft or vessel is brought into this state within the first 12 months of ownership for the limited purposes of repair, retrofit, or modification, provided that no more than 25 hours of air or sailing time is logged for incidental or other use. Effective January 1, 2010, any repair, retrofit, or modification to a vessel must be done by a licensed repair facility and any repair, retrofit, or modification to an aircraft must be done by a repair station certified by the Federal Aviation Administration or a manufacturer’s maintenance facility. Therefore, a vessel that enters California during the first 12 months of ownership for the purpose of repair, retrofit, or modification performed by any person other than a licensed repair facility, or an aircraft that enters California during the first 12 months of ownership for the purposes of repair, retrofit, or modification performed by any person other than a repair station certified by the Federal Aviation Administration or a manufacturer’s maintenance facility, will be presumed to have been purchased for use in California. This exclusion does not apply to vehicles.

    Warranty and repair service for vehicles
    A vehicle is not presumed to have been purchased for use in California, and is therefore not presumed to be subject to use tax, if the vehicle is brought into this state within the first 12 months of ownership for the exclusive purpose of warranty or repair service, provided that the vehicle was used or stored in this state for that purpose for 30 days or less.

    Interstate or foreign commerce
    The use of a vehicle, vessel, or aircraft in interstate or foreign commerce may qualify as exempt from the use tax. If the vehicle, vessel, or aircraft first enters California within the first 12 months of ownership after being first functionally used outside California and one-half or more of the vehicle miles traveled, nautical miles traveled, or flight time traveled, respectively, during the first six months immediately following its entry into this state are commercial miles traveled or commercial flight time traveled in interstate or foreign commerce, the use of the vehicle, vessel, or aircraft is not subject to the use tax.

    Many of the questions and answers below address purchases made by individuals. However, section 6248 addresses purchases made by both individuals and legal entities such as corporations or partnerships. For more information, please call our Information Center at 800-400-7115 Monday through Friday (except state holidays) 8 a.m. to 5 p.m. (Pacific Time). The Information Center's TDD/TTY number is 800-735-2929.

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  3. What is a binding purchase contract?

    A contract is an agreement to do or not to do a certain thing. Therefore, a purchase contract for a vehicle, vessel, or aircraft is an agreement to buy the vehicle, vessel, or aircraft. A binding purchase contract is an enforceable contract for the purchase of a vehicle, vessel, or aircraft.

    To form a binding purchase contract, one required element is that all parties to the contract must agree to the same terms for the purchase of the vehicle, vessel, or aircraft. For example, an agreement to agree is not binding, because the parties have not agreed to one or more of the specific terms that can be enforced. Another required element of a binding purchase contract is that each of the parties must be obligated to fulfill his or her part of the contract. This means that if one of the parties promises to buy or sell only if he or she chooses, a contract is not binding.

  4. Which law applies if I have entered into a binding contract to purchase a vehicle, vessel, or aircraft during the period from July 1, 2007 through September 30, 2008, but delivery of the vehicle, vessel, or aircraft occurs after September 30, 2008?

    If a binding contract for the purchase of the vehicle, vessel, or aircraft was entered into between July 1, 2007 and September 30, 2008, the law that was in effect during the period from July 1, 2007 through September 30, 2008, applies, even if the delivery of the vehicle, vessel, or aircraft occurs after September 30, 2008.

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  5. Which law applies if I have entered into a binding contract to purchase a vehicle, vessel, or aircraft during the period from July 1, 2007 through September 30, 2008, but the construction of the vehicle, vessel, or aircraft will not be completed until after September 30, 2008?

    If a binding contract was entered into between July 1, 2007 and September 30, 2008, the law in effect during the period from July 1, 2007 through September 30, 2008, applies, even if the construction of the vehicle, vessel, or aircraft will not be completed until after September 30, 2008.

Questions and Answers for California Residents

  1. The vehicle, vessel, or aircraft I purchase on or after October 1, 2008 enters California during the first 12 months of ownership. Can I still qualify for an exclusion from use tax?

    Under current law, when a California resident purchases a vehicle, vessel, or aircraft outside of California and the vehicle, vessel, or aircraft enters the state during the first 12 months from the date of purchase, it is presumed that the vehicle, vessel, or aircraft was purchased for storage, use, or other consumption in California and that its use is subject to tax. To show that the vehicle, vessel, or aircraft was not purchased for use in California and, therefore, qualifies for an exclusion from use tax, you must provide documentary evidence to show that the vehicle, vessel, or aircraft was purchased for use outside of California during the first 12 months of ownership. Evidence may include, but is not limited to, evidence of registration with the proper authority outside of California. A purchaser's failure to provide such evidence will result in the purchase being subject to tax.

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  2. I purchase a vehicle or vessel out of state on or after October 1, 2008, and register it with the California Department of Motor Vehicles (DMV). Can my purchase and use qualify for an exclusion from use tax if I do not bring the vehicle or vessel into California during the first 12 months of ownership?

    We will not consider your purchase to be for use in California unless you bring the vehicle or vessel into California during the first 12 months of ownership. However, when a California resident purchases a vehicle or vessel outside of California and the vehicle or vessel does enter the state during the first 12 months of ownership, we will presume that the vehicle or vessel was purchased for storage, use, or other consumption in California and, therefore, that its use is subject to tax. The registration of such a vehicle or vessel with the California DMV by a California resident supports intent to use the vehicle or vessel in California.

    However, a California resident may request a certificate of tax clearance (BOE-111, Certificate of Vehicle, Mobilehome, or Motor Coach Use Tax Clearance; BOE-111-B, Certificate of Vessel Use Tax Clearance) from the BOE so that the registration of the vehicle or vessel may be completed with the DMV without the payment of use tax at that time. Instructions on requesting forms BOE-111 or BOE-111-B are available in response to question 2 at this link. At the end of the first 12 months of ownership, the California resident must clearly demonstrate through documentary evidence that the vehicle/vessel in question did not enter the state during this period of time. Without that evidence, we will presume the vehicle or vessel is for use in California and tax would be owed.

    If we determine that a vehicle or vessel registered in California qualifies for an exclusion from use tax based upon the use of the vehicle or vessel in another state, we may give certain information about this use to that state.

  3. Am I considered a California resident if I maintain a residence in California and a residence in another state?

    If you maintain a residence in California and a residence in another state, California Vehicle Code section 516 will be used to determine the state of your primary residency. The definition of "resident" in section 516 provides criteria for determining an individual's primary residency. These criteria include where an individual is registered to vote and the location of the individual's place of employment or business. . Effective January 1, 2010, a California resident also includes a closely held corporation or limited liability company if 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California. Of course, even if California is determined to be the place of an individual's primary residency, the vehicle, vessel, or aircraft must still be brought to California within 12 months after purchase before its use may become subject to use tax.

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  4. A California resident purchases a vehicle outside of the state from a California dealer and represents to the dealer that the vehicle has not been purchased for use in the state (by completing and signing a BOE-447 and BOE-448). May the dealer accept the form and register the vehicle with the California Department of Motor Vehicles (DMV) without collecting the use tax?

    BOE-447, Statement Pursuant to Section 6247 of the California Sales and Use Tax Law, is used by purchasers to certify that a vehicle purchased and delivered to an out-of-state location will not be brought into California during the first 12 months of ownership. BOE-448, Statement of Delivery Outside California, is used by automobile dealers to certify that a vehicle has been delivered to a purchaser at an out-of-state location.

    A dealer may complete the DMV registration of a vehicle for its California customers. However, if the dealer accepts a BOE-447 and BOE-448 from a California resident who requests that the dealer register the vehicle in California, the dealer's good faith acceptance of these certifications may be questioned and the dealer may be liable for the tax if it is subsequently determined that the vehicle was purchased for use in California.

Use in Interstate or Foreign Commerce

  1. The vehicle, vessel, or aircraft I purchase out of state on or after October 1, 2008 enters California during the first 12 months of ownership, and is used in interstate or foreign commerce. Can my purchase and use of the vehicle, vessel, or aircraft qualify for an exclusion from use tax?

    When a California resident purchases a vehicle, vessel, or aircraft outside of California on or after October 1, 2008, and the vehicle, vessel, or aircraft enters the state during the first 12 months of ownership, we will presume the purchase was for use in California and subject to tax. However, use tax generally will not apply if

    • The vehicle, vessel, or aircraft is first functionally used outside California, and
    • One-half or more of the miles traveled by the vehicle, or the nautical miles traveled by the vessel, or flight time traveled by the aircraft during the six-month period immediately following entry into California are commercial miles or flight time traveled in interstate or foreign commerce.

    The term "commercial" applies to business uses and excludes personal use (Regulation 1620(b)(5)(C)). Use tax generally will not apply to a vehicle, vessel, or aircraft that is both first functionally used outside the state of California and is continuously used in interstate or foreign commerce within and without California, and not exclusively in California (Regulation 1620(b)(2)(B)1). Additional information regarding interstate and foreign commerce is available in response to Frequently Asked Question 3.b. Interstate and Foreign Commerce.

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  2. I purchase an aircraft for use in or for lease as a common carrier. Can my purchase and use qualify for exemption from tax if the aircraft is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

    If the requirements for the common carriage exemption are met, the aircraft's purchase and use are generally exempt from tax even if the aircraft was purchased outside this state by a California resident on or after October 1, 2008, and was brought into this state within the first 12 months of ownership. The requirements for the common carriage exemption are explained in our response to Frequently Asked Question 3.m. Aircraft Common Carrier.

Use in Interstate or Foreign Commerce

  1. I purchase a vessel for use in commercial deep sea fishing. Can my purchase and use qualify for exemption from tax if the vessel is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

    If the requirements for the commercial deep sea fishing exemption are met, the vessel's purchase and use are generally exempt from tax even if the vessel was purchased outside this state by a California resident on or after October 1, 2008, and was brought into this state within the first 12 months of ownership. These requirements are generally explained in publication 40, Tax Tips for the Watercraft Industry, and in our response to Frequently Asked Question 3.a. Commercial Deep Sea Fishing.

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