FAQ - 12 Month Test

The following questions and answers pertain to purchases of vehicles, vessels, and aircraft, during the period of October 2, 2004 through June 30, 2007, and on or after October 1, 2008, subject to the 12-month test provisions only.  Purchases of vehicles, vessels, and aircraft prior to October 2, 2004 and from July 1, 2007 through September 30, 2008 were subject to the 90-day test provisions.  Please see Regulation 1620 for more information.

General Questions

  1. What are the 12-month test provisions?

Binding Purchase Contracts

  1. What is a binding purchase contract?

Questions for California Residents

  1. The vehicle, vessel, or aircraft I purchase on or after October 1, 2008 enters California during the first 12 months of ownership. Can I still qualify for an exclusion from use tax?
  2. I purchase a vehicle or undocumented vessel out of state on or after October 1, 2008, and register it with the California Department of Motor Vehicles (DMV). Can my purchase and use qualify for an exclusion from use tax if I do not bring the vehicle or vessel into California during the first 12 months of ownership?
  3. Am I considered a California resident if I maintain a residence in California and a residence in another state?
  4. A California resident purchases a vehicle outside of the state from a California dealer and represents to the dealer that the vehicle has not been purchased for use in the state (by completing and signing a BOE-447 and BOE-448). May the dealer accept the form and register the vehicle with the DMV on behalf of the purchaser without collecting the use tax?

Use in Interstate or Foreign Commerce

  1. The vehicle, vessel, or aircraft I purchase out of state on or after October 1, 2008 enters California during the first 12 months of ownership, and is used in interstate or foreign commerce. Can my purchase and use of the vehicle, vessel, or aircraft qualify for an exclusion from use tax?

Aircraft Used as a Common Carrier

  1. I purchase an aircraft for use in or for lease as a common carrier of persons or property. Can my purchase and use of the aircraft qualify for exemption from tax if the aircraft is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

Commercial Deep Sea Fishing Vessel

  1. I purchase a vessel for use in commercial deep sea fishing. Can my purchase and use qualify for exemption from tax if the vessel is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

  1. What are the 12-month test provisions?

    For the period of October 2, 2004, through June 30, 2007, and on or after October 1, 2008, any vehicle, vessel, or aircraft purchased outside of California, first functionally used outside of California, and thereafter brought into California 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 tax if that vehicle, vessel, or aircraft is:

      • Purchased by a California resident as defined in section 516 of the California Vehicle Code, or
      • A vehicle subject to registration under the California Vehicle Code, or an aircraft or vessel subject to property tax in this state, during the first 12 months of ownership, or
      • Used or stored in this state more than one-half of the time during the first 12 months of ownership.

    Under any of the conditions described above, it is presumed that use tax will apply. Nevertheless, if a purchaser provides satisfactory documentary evidence showing that the vehicle, vessel, or aircraft was purchased for use outside of California during the first 12 months of ownership, use tax will not apply. Acceptable evidence may include proof of registration of that vehicle, vessel, or aircraft, with the proper out-of-state authority. This documentation must be submitted to the Board of Equalization for evaluation.

    Binding Contract
    Revenue and Taxation Code section 6248 provides that the 12-month test provisions do not apply if a vehicle, vessel, or aircraft is purchased, or was the subject of a binding purchase contract that was entered into, during a time period when the 90-day test provisions were in effect (prior to October 2, 2004 and July 1, 2007 through September 30, 2008).

    Resident
    Vehicle Code section 516 provides in pertinent part that a "resident" means any person, including a natural person, firm, partnership, association, limited liability company, or corporation, who shows an intent to live or be located in California on more than a temporary basis. Effective January 1, 2010, a California resident also includes a closely held corporation or limited liability company in which 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California as defined in section 516 of the Vehicle Code. The Vehicle Code presumes that you are a California resident if you have a presence in California for six months or more in any 12-month period. Furthermore, factors that may be considered as evidence of residency include, for example, the address where you are registered to vote, the location of your place of employment or business, filing a homeowner's property tax exemption, possession of a California driver's license, renting or leasing a home for use as a residence, a declaration of residency in order to obtain a privilege or benefit not ordinarily extended to nonresidents.

    Limited Exclusions

    Repair, retrofit, and modification of vessels or aircraft
    Use tax does not apply to the purchase of an aircraft or vessel brought into this state within the first 12 months of ownership for the limited purposes of repair, retrofit, or modification, and thereafter returned or delivered outside this state, provided that no more than 25 hours of air or sailing time is logged on the vessel or aircraft while it is in California (exclusive of time spent after completing the repair for the sole purpose of returning or delivering the aircraft or vessel to a point outside this state). Effective January 1, 2010, any repair, retrofit, or modification to a vessel must be done by a licensed repair facility* and any repair, retrofit, or modification to an aircraft must be done by a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility. Therefore, the exclusion is inapplicable when a vessel that enters California during the first 12 months of ownership for the purpose of repair, retrofit, or modification performed by any person other than a licensed repair facility, or an aircraft that enters California during the first 12 months of ownership for the purposes of repair, retrofit, or modification performed by any person other than a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility. This exclusion does not apply to vehicles.

    *For purposes of this exclusion, a licensed repair facility must hold an appropriate permit issued by the BOE and must be licensed to do business by the city, county, or city and county in which it is located if the city, county, or city and county so requires.

    Warranty and repair service for vehicles
    When a vehicle is first functionally used outside this state, and thereafter enters this state during the first 12 months own ownership, the presumption that the vehicle was purchased for use within this state may be rebutted by establishing that the vehicle was brought into this state within the first 12 months of ownership for the exclusive purpose of warranty or repair service, provided that the vehicle was used or stored in this state for that purpose for 30 days or less. Supporting documentation must include a work order stating the dates that the vehicle is in possession of the warranty or repair facility, and a statement by the owner of the vehicle specifying the dates of travel to and from that facility.

    Interstate or foreign commerce
    Use tax may be inapplicable to the purchase of a vehicle, vessel, or aircraft for use in interstate or foreign commerce. See our response to question 7 for additional information.

    Many of the questions and answers below address purchases made by individuals. However, section 6248 addresses purchases made by both individuals and legal entities such as corporations or partnerships. For more information, please call our Information Center at 800-400-7115 Monday through Friday (except state holidays) 8 a.m. to 5 p.m. (Pacific Time). The Information Center's TDD/TTY number is 800-735-2929.

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  2. What is a binding purchase contract?

    A contract is an agreement to do or not to do a certain thing. Therefore, a purchase contract for a vehicle, vessel, or aircraft is an agreement to buy the vehicle, vessel, or aircraft. A binding purchase contract is an enforceable contract for the purchase of a vehicle, vessel, or aircraft.

    For these purposes, to determine if a "purchase agreement" is a binding and enforceable purchase contract, there generally must be four elements:

      1. The parties must have legal capacity to enter into a contract (e.g., persons under the age of 18, and mentally disabled persons, under the custody of a legal guardian generally do not have such capacity);
      2. Mutual asset or agreement between buyer and seller to form a binding contract;
      3. Consideration; and
      4. The contract generally cannot be for an illegal or unconscionable purpose.

    Contract "consideration" requires that each party receive a bargained for exchange and incur a legal detriment. Thus, for example, a contract may be illusory and unenforceable, if only one party is obligated to perform and the contract imposes no definite obligation on the other party.

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Questions and Answers for California Residents

  1. The vehicle, vessel, or aircraft I purchase on or after October 1, 2008 enters California during the first 12 months of ownership. Can I still qualify for an exclusion from use tax?

    Under current law, when a California resident purchases a vehicle, vessel, or aircraft outside of California, first functionally uses it outside this state, and thereafter the vehicle, vessel, or aircraft enters the state during the first 12 months from the date of purchase, it is presumed that the vehicle, vessel, or aircraft was purchased for storage, use, or other consumption in California and that its use is subject to tax. To show that the vehicle, vessel, or aircraft was not purchased for use in California and, therefore, qualifies for an exclusion from use tax, you must provide documentary evidence to show that the vehicle, vessel, or aircraft was purchased for use outside of California during the first 12 months of ownership. Evidence may include, but is not limited to, evidence of registration with the proper authority outside of California. A purchaser's failure to provide such evidence will result in the purchase being subject to tax.

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  2. I purchase a vehicle or undocumented vessel out of state on or after October 1, 2008, and register it with DMV. Can my purchase and use qualify for an exclusion from use tax if I do not bring the vehicle or vessel into California during the first 12 months of ownership?

    Under the 12-month test, the law does not presume that a purchase is for use in California unless you bring the vehicle or vessel into California during the first 12 months of ownership. However, when a California resident purchases a vehicle or vessel outside of California and the vehicle or vessel does enter the state during the first 12 months of ownership, it is presumed that the vehicle or vessel was purchased for storage, use, or other consumption in California and, therefore, that its use is subject to tax. Further, the registration of a vehicle or undocumented vessel with the California DMV evidences intent to use the vehicle or vessel in California.

    However, a California resident may request a certificate of use tax clearance (BOE-111, Certificate of Vehicle, Mobilehome, or Motor Coach Use Tax Clearance; BOE-111-B, Certificate of Vessel Use Tax Clearance) from the BOE so that the registration of the vehicle or undocumented vessel may be completed with the DMV without the payment of use tax at that time. Instructions on requesting forms BOE-111 or BOE-111-B are available in response to question 1 at this link. At the end of the first 12 months of ownership, the California resident must clearly demonstrate through documentary evidence that the vehicle/vessel in question did not enter the state during this period of time. Without that evidence, it is presumed the vehicle or vessel was purchased for use in California and tax would be owed.

    If we determine that a vehicle or vessel registered in California qualifies for an exclusion from use tax based upon the use of the vehicle or vessel in another state, we may give certain information about this use to that state.

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  3. Am I considered a California resident if I maintain a residence in California and a residence in another state?

    Section 6248 provides that California Vehicle Code section 516 will be used to determine if you are a California resident for purposes of the 12-month test. Vehicle Code section 516 provides criteria for determining whether a person is a resident of this state. These criteria include for example, the address where you are registered to vote, the location of your place of employment or business, filing a homeowner's property tax exemption, possession of a California driver's license, renting or leasing a home for use as a residence, a declaration of residency in order to obtain a privilege or benefit not ordinarily extended to nonresidents.

    Effective January 1, 2010, a California resident also includes a closely held corporation or limited liability company if 50 percent or more of the shares or membership interests are held by shareholders or members who are residents of California. Of course, even if the purchaser is a California resident, the vehicle, vessel, or aircraft must still be brought to California within 12 months after purchase before its use may become subject to use tax.

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  4. A California resident purchases a vehicle outside of the state from a California dealer and represents to the dealer that the vehicle has not been purchased for use in the state (by completing and signing a BOE-447 and BOE-448). May the dealer accept the form and register the vehicle with the DMV on behalf of the purchaser without collecting the use tax?

    BOE-447, Statement Pursuant to Section 6247 of the California Sales and Use Tax Law, is used by purchasers to certify that a vehicle purchased and delivered to an out-of-state location will not be brought into California during the first 12 months of ownership. BOE-448, Statement of Delivery Outside California, is used by vehicle dealers to document that a vehicle was actually delivered to a purchaser at an out-of-state location.

    A dealer may complete the DMV registration of a vehicle on behalf of its California customers. However, if the dealer accepts a BOE-447 and BOE-448 from a California resident who requests that the dealer register the vehicle in California on behalf of the purchaser, the dealer's timely and good faith acceptance of the 6247 statement (BOE-447) may be questioned and the dealer may be liable for failure to collect use tax from the purchaser if it is subsequently determined that the vehicle was purchased for use in California.

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Use in Interstate or Foreign Commerce

  1. The vehicle, vessel, or aircraft I purchase out of state on or after October 1, 2008 enters California during the first 12 months of ownership, and is used in interstate or foreign commerce. Can my purchase and use of the vehicle, vessel, or aircraft qualify for an exclusion from use tax?

    When a California resident purchases a vehicle, vessel, or aircraft outside of California on or after October 1, 2008, first functionally uses it outside this state, and the vehicle, vessel, or aircraft thereafter enters the state during the first 12 months of ownership, the law presumes that the purchase was for use in California and subject to tax. Nevertheless, use tax generally will not apply if

      1. The vehicle, vessel, or aircraft is first functionally used outside California, and
      2. One-half or more of the miles traveled by the vehicle, or the nautical miles traveled by the vessel, or the flight time traveled by the aircraft during the six-month period immediately following entry into California are commercial miles or flight time traveled in interstate or foreign commerce.

    The term "commercial" applies to business uses and excludes personal use (Regulation 1620(b)(5)(C)).

    Alternatively, if the conditions for the above exclusion from use tax are not satisfied, there is also an exemption from use tax for property used in interstate and foreign commerce prior to entering California. Use tax generally will not apply to the use of a vehicle, vessel, or aircraft that was first used in interstate or foreign commerce prior to entering this state, and is thereafter continuously used in interstate or foreign commerce both within and without California, and not exclusively in California (Regulation 1620(b)(2)(B)1). Additional information regarding interstate and foreign commerce is available in response to Frequently Asked Question 2.b. Interstate and Foreign Commerce.

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  2. I purchase an aircraft for use in or for lease as a common carrier of persons or property. Can my purchase and use of the aircraft qualify for exemption from tax if the aircraft is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

    If the requirements for the common carrier exemption are met, the aircraft's purchase and use are generally exempt from tax. Thus, provided the requirements are met, tax will not apply even if the aircraft was purchased in this state, or was purchased outside this state and first functionally used in this state or brought into this state within the first 12 months of ownership by a California resident. The requirements for the common carrier exemption are explained in our response to Frequently Asked Question 2.m. Aircraft Common Carrier.

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Use in Interstate or Foreign Commerce

  1. I purchase a vessel for use in commercial deep sea fishing. Can my purchase and use qualify for exemption from tax if the vessel is purchased out of state on or after October 1, 2008, and enters California during the first 12 months of ownership?

    If the requirements for the commercial deep sea fishing exemption are met, the vessel's purchase and use are generally exempt from tax. Thus, provided the requirements are met, tax will not apply even if the vessel was purchased in this state, or was purchased outside this state and first functionally used in this state or brought into this state within the first 12 months of ownership by a California resident. These requirements are generally explained in publication 40, Tax Tips for the Watercraft Industry, and in our response to Frequently Asked Question 2.a. Commercial Deep Sea Fishing.

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