Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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325.0000 Interstate and Foreign Commerce—Regulation 1620

Annotation 325.0180

(a) In General—Shipments Into California from Points Outside State

325.0180 Unused Property Returned to California Company from Out of State. A California company provides sales invoices with various advertisements printed on the bottom to out-of-state recipients free of charge. The invoices are shipped by a California printer directly to the out-of-state recipients. These invoices must be used by recipients during a specific period as the advertisements are valid for a limited time period and contain an expiration date. The recipients are required to return all unused invoices to the California company.

Tax applies to the sales price of the invoices returned to the California company from the out-of-state recipients. The California company's use for purposes such as tracking the number of unused invoices, recycling, destruction, modification and reissuance, etc. is considered functional use in this state since the returned invoices are used for a purpose suitable for outdated sales invoices. The 90-day rule provided in Regulation 1620 applies where there is a first functional use of the property outside California. In this case, the returned invoices are never functionally used outside California and the 90-day rule does not apply. 2/23/98. (M99–2).