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 325.1070

(c) Shipments from California to Points Outside State

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

325.1070 Tooling Held by Manufacturer. If payment is made in full, but tooling is held by the manufacturer on behalf of the customer without a contractual duty by the manufacturer to deliver or ship it to a foreign destination, the sale of the tooling is fully taxable as a sale which takes place in California.

On the other hand, if the contract provides for the export of the tooling, and the export meets the requirements of Regulation 1620 and there is no functional use of the property in this state, the export exemption will apply. If the manufacturer only tests the tooling, it will not be considered a functional use and will not in and of itself disqualify the sale of the tooling from the export exemption. 12/16/93.