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 325.0345

(c) Shipments from California to Points Outside State

(1) Generally

325.0345 Supporting Documentation Needed by Contract Carrier. With respect to operations involving the transportation by boat of property purchased by oil companies from points in California to oil drilling locations in waters outside of California, the following persons qualify as "carriers" within the meaning of section 6396 of the Revenue and Taxation Code: (1) independent boat operators, other than drilling contractors, who contract with the oil company, either directly or through a drilling contractor, to transport the property regularly for compensation and (2) boat operators who are also drilling contractors, who contract with the oil company to transport the property regularly for compensation, even though the contract may be for a lump sum, including compensation for transportation and drilling, where 15–20 percent of the total compensation is allocable to the transportation.

The following documentation is acceptable in support of the exemption under section 6396:

(1) A blanket or individual purchase order given the vendor solely covering sales with delivery to Outer Continental Shelf locations wherein a statement is made substantially as follows:

All property purchased under this order shall be shipped by carrier to those specific locations situated in the Outer Continental Shelf beyond the territorial waters of the State of California as designated to the vendor by the purchaser. Should any property purchased hereunder not be so shipped to a location outside the State of California in the exempt manner prescribed under section 6396 of the Revenue and Taxation Code, purchaser agrees to pay any applicable state and local sales or use taxes that might be imposed with respect to the purchase of such property.

(2) The vendor issues an invoice which makes reference to the blanket purchase order and indicates thereon the point at which the goods are to be delivered by the vendor and the drilling site to which the property is to be taken by the carrier.

(3) The vendor obtains a receipt, or a receipted invoice, from the carrier to whom the property is delivered. The receipt is to be retained by the vendor. 9/21/71.