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 325.0678

(c) Shipments from California to Points Outside State

(2) Delivery to Purchaser in State

325.0678 Photographic Sales and Supplies. A company is considering operating a photographic processing mini lab and film store on board cruise ships that pick up passengers at California ports. The company will purchase photographic supplies from California retailers to be delivered to a freight forwarder in California for subsequent loading onto the cruise ship. The company will take delivery (possession) of the supplies once they have been brought on board the ship. The company will have no offices or employees in California and the supplies purchased by the company will either be for resale or for its use in developing film and printing photographs on board the ship. All of the sales will be made in international waters to passengers on the cruise ship and the usage of the supplies by the company will also occur in international waters.

With regard to the company's purchase of supplies which it intends to resell on board the cruise ship, the company can provide its California vendors with a resale certificate and purchase those items ex-tax. The sale of those photographic supplies purchased by the company from California vendors for the company's own use are taxable since the company takes possession of the supplies when they are delivered to the company on board the ship in California. Property purchased in California under a resale certificate and subsequently used outside of California, which at the time of purchase was contemplated to be resold, is excluded from tax. However, if at the time of purchase, the purchaser knew that the property purchased for resale was not to be resold, the purchaser is liable for tax. 10/7/86; 7/11/88.