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 325.0614

(c) Shipments from California to Points Outside State

(2) Delivery to Purchaser in State

325.0614 Bus Leased Not a Common Carrier. A lessor is engaged in the business of renting tax-paid film and lighting equipment including vans or busses to house and transport the equipment to film production locations. The equipment that houses and transports the filming and lighting equipment consist of greyhound-like busses described as mobile filming studios which contain technical equipment including a self-contained power source. The lessor always requires a trained driver-technician to operate the equipment every time the unit is leased. These driver-technicians are trained by the lessor but are not on the lessor's payroll for labor union reasons. Lessees must have a driver-technician trained by the lessor and may select anyone they wish, otherwise the lessor designates a driver. The drivers are paid by the lessees of the equipment as independent contractors. The lessor has no control over the driver or the equipment. Custody of everything on the bus is in the driver until the bus reaches its out-of-state destination.

In addition to leasing the bus and equipment, the lessor sells filming supplies which are purchased and consumed by the lessee-producers who lease the equipment. The supplies needed are estimated by the lessee-producers, placed on board the bus before it leaves the lessor's place of business, and transported to the out-of-state destination where filming is done. The supplies are used as needed during the filming operations and when the equipment is returned to the lessor, an accounting for the supplies is made and the lessee-producer is billed for everything not accounted for and returned.

The arguments that the supplies are consigned goods and that there is no sale until the supplies are withdrawn from the bus and consumed at the out-of-state destinations are not valid.

The above transaction does not involve a consignment because the sale of the supplies is not a sale for resale to the lessee-producer. The transaction is a retail sale to the lessee producer who is the consumer of the supplies. Also, a sale is not dependent on when or where the property is consumed physically.

The sales of filming supplies are not exempt from the sales tax under Regulation 1620(a)(3)(B) since none of the requirements are met. First, the bus is under lease to the lessee-producer, and the driver is being paid by the lessee-producer. Therefore, the lessor is not using his facilities or his employee to transport the property out of state. Second, the bus is not a common carrier. Also, the transaction is subject to sales tax under subsection (a)(3)(A) which states in part that "sales tax applies when the property is delivered to the purchaser or his representative in this State." 7/14/81.