Laws, Regulations and Annotations


Business Taxes Law Guide – Revision 2023

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 4. Exemptions

Article 2. Exemptions from Sales Tax

Section 6396

6396. Interstate shipments. There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property which, pursuant to the contract of sale, is required to be shipped and is shipped to a point outside this state by the retailer by means of: (a) facilities operated by the retailer, or (b) delivery by the retailer to a carrier, customs broker or forwarding agent, whether hired by the purchaser or not, for shipment to such out-of-state point.

For purposes of this section, the term "carrier" shall mean a person or firm engaged in the business of tranporting for compensation tangible personal property owned by other persons, and includes both common and contract carriers. The term "forwarding agent" shall mean a person or firm engaged in the business of preparing property for shipment or arranging for its shipment.

History—Added by Stats. 1970, p. 2872, in effect September 19, 1970.

Actual out-of-state delivery required.—Exemption does not apply where seller delivered vehicles to carrier and obtained buyers' certificates of out-of-state delivery, but delivery actually occurred in state. Engs Motor Truck Co. v. State Board of Equalization (1987) 189 Cal.App.3d 1458.

Forwarding agent's in-state deliveries taxable.—When the deliveries of mobilehomes were made to purchasers in California, the transactions were subject to sales tax, even though the contract of sale required shipment out of state, the seller first delivered the mobilehomes to a forwarding agent, and the purchasers removed the mobilehomes out of state. Pope v. State Board of Equalization (1988) 202 Cal.App.3d 73.

Completion of manufacture and sale by second retailer.—Under particular facts of this case, the change in contractors prior to completion of the full contract did not constitute delivery in California where the second contractor delivered the property out of state by common carrier as the original contract required. Chevron U.S.A. Inc. v. State Board of Equalization (1997) 53 Cal.App.4th 289.