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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2370
(a) In General
330.2370 Motor Vehicles—Interstate Transactions. A taxpayer leased a car in Texas and within 90 days was transferred to California by his employer. In accordance with Texas tax law, the lessor had paid tax on the purchase price of the vehicle. A vehicle brought into the state within 90 days may be subject to use tax on the purchase price while one brought in after 90 days would not be subject to tax on the purchase price. [See note below.] Since the vehicle entered the state within 90 days from the date of purchase, the lessor has the option to pay California use tax on cost and receive a credit for Texas sales tax paid. If the lessor fails to make this timely election, use tax will be due on the rental receipts. In this case, although at the time the lease started the lessee did not know he was to be transferred to California, the possession of leased property by a lessee is a continuing purchase for use in this state and the lease payments are subject to use tax. The lessee is not entitled to an offset credit pursuant to section 6406 because the Texas tax was imposed on the lessor and the California use tax on rental payments is imposed on the lessee. 5/10/91. (Am. 2006–1; Am. 2008–1).
(Note.—For the period October 2, 2004 through June 30, 2007, under certain conditions any vehicle, vessel, or aircraft purchased outside of California and brought into the state within 12 months from the date of its purchase is presumed to be acquired for storage, use, or other consumption in California and subject to use tax.) (Regulation 1620(b)(5).)