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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Court Decisions
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Action Trailer Sales, Inc. v. State Board of Equalization … (1975)
Regulation 1660(c)(2) Upheld
Plaintiff was a lessor of mobile office trailers whose usual practice was to pay sales tax reimbursement on the purchase price of the trailers and then to lease the trailers tax-free as permitted by Section 6006(g)(5) of the Revenue and Taxation Code. Plaintiff, however, failed to pay tax or tax reimbursement on the purchase of 100 of its trailers and also failed to collect use tax on these trailers based on the lease payments. When this was discovered during audit, plaintiff offered to pay tax computed on the purchase price together with interest and penalties due, but the Board determined in accordance with Regulation 1660(c)(2) that plaintiff, having failed to pay tax or tax reimbursement at the time the trailers were first placed in lease service, was required to pay an amount equal to the use taxes that should have been collected with the lease payments.
Plaintiff paid and sued for refund on the basis that the provision in the Board's Regulation 1660(c)(2) was not authorized by the statute and that plaintiff should be permitted to pay tax measured by purchase price. The court of appeal upheld the Board, finding that the Board's construction of the statute as expressed in the regulation is implicit in and required by the statute and that the propriety of the interpretation was indicated by the failure of the Legislature to dictate a contrary interpretation in any of the five amendments to the statute enacted after the adoption of the Board's regulation. Action Trailer Sales, Inc. v. State Board of Equalization (1975) 54 Cal.App.3d 125.