Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Uniform Local Sales and Use Tax Annotations

700.0000 APPLICATION OF TAX—Regulation 1803

Annotation 700.0280

700.0280 Use Tax Direct Reporting. The taxpayer is a wind turbine generator developer. It purchased turbines for installation on realty in California. The taxpayer is the ultimate purchaser/consumer of the wind turbine generators. It obtained building permits from both County A and City B and hired the contractors to install the turbines. The vendor is located out of state and is not registered to collect use tax. The taxpayer installed 10 turbines in the city and 64 in the unincorporated area of the county. It filed individual use tax returns reporting the total purchase price as about $48 million. The taxpayer is the consumer so the installation contracts do not carry sales or use tax consequences under Regulation 1521 even though the turbines are affixed to real property. Under Regulation 1802(c)(2), a person required to report and pay use tax to the Board who makes a purchase of $500,000 or more shall report the local use tax directly to the location of the place of use rather than through the county-wide pool. Since the taxpayer purchased the turbines from an unregistered out-of-state vendor, it must self-report the use tax on these purchases. Assuming that the purchase and installation of all of the turbines was pursuant to one contract, the purchase price exceeds $500,000 in total. The taxpayer presumably does not negotiate sales at the locations where the turbines are affixed, so those locations cannot be issued seller's permits. Therefore, the local use tax derived from these purchases should be reported directly under the regulation to the two jurisdictions in which the turbines were installed. (7/15/03). (2004–2).