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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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335.0000 Leases of Mobile Transportation Equipment— Regulation 1661
Annotation 335.0043.875
335.0043.875 Lease of Tractors. A corporation engaged in business as a truck tractor dealer sold 22 tractors to an out-of-state lessor with delivery in California to the lessee. Although a resale certificate was not issued, the purchaser, by letter stated that the tractors were purchased for lease and that tax was being reported by the lessee. The corporation believed that no further tax liability existed because the lessor and the lessee agreed in their lease agreement that the lessee would report all tax on the leases directly to the State Board of Equalization.
The tractors are "mobile transportation equipment" as defined in section 6023. The corporation knew when it made the sale that the lessor was leasing the tractors. In fact, the tractors were delivered directly to the lessee. As a lease of mobile transportation equipment is not a sale, the sale to the lessor could not be a sale for resale. If the lessor wished to avail itself of the option to report the tax liability on fair rental value pursuant to section 6092.1, it should have issued a resale certificate. Since it did not, the corporation as the retailer, is responsible for the sales tax. 11/27/90.