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 325.0800

(c) Shipments from California to Points Outside State

(4) Delayed Shipment; Use Prior to Shipment; "Bailee Clauses"

325.0800 "Bailee Clause" Inoperative. "A" corporation located out-of-state but wholly owned by "B" corporation in California purchases a truck chassis from a California manufacturer with instructions to deliver it to "C" Corporation in California for the installation of body and tanks. Order contains a "bailee clause," stating that "C" corporation acts as bailee for the seller. Subsequently, the truck is delivered to "B" corporation in California for painting and following this operation the truck is delivered out-of-state to "A" corporation.

The so-called "bailee clause" is, under the circumstances, inoperative to create a nontaxable interstate sale. The initial delivery in this State to the buyer's representatives and the substantial work performed on the truck by such representatives are inconsistent with the retention of ownership by the seller. 11/23/53.