Article 2 - Exemptions From Sales Tax

California Revenue and Taxation Code — §§ 6381-6396

Sections (11)

Amended by Stats. 1986, Ch. 308, Sec. 15.

There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of any tangible personal property to:

(a)The United States, its unincorporated agencies and instrumentalities;

(b)Any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States;

(c)The American National Red Cross, its chapters and branches.

§ 6384

Amended by Stats. 1955, Ch. 795.

Notwithstanding any other provision of law the tax imposed under this part shall apply to the gross receipts from the sale of any tangible personal property to contractors purchasing such property either as the agents of the United States or for their own account and subsequent resale to the United States for use in the performance of contracts with the United States for the construction of improvements on or to real property in this State.

§ 6385

Current Version

Amended (as amended by Stats. 2012, Ch. 293, Sec. 1) by Stats. 2023, Ch. 442, Sec. 1. (AB 543) Effective October 8, 2023. Repealed as of January 1, 2029, by its own provisions. See later operative version, as amended by Sec. 2 of Stats. 2023, Ch. 442.

(a)There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property, other than fuel and petroleum products, to a common carrier, shipped by the seller via the purchasing carrier’s facilities under a bill of lading whether the freight is paid in advance, or the shipment is made freight charges collect, to a point outside this state and the property is actually transported to the out-of-state destination for use by the carrier in the conduct of its business as a common carrier.

(b)There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property, other

than aircraft fuel and petroleum products, purchased by a foreign air carrier and transported by the foreign air carrier’s facilities to a foreign destination for use by the air carrier in the conduct of its business as a common carrier by air of persons or property. To qualify for this exemption, the foreign air carrier shall furnish to the seller a certificate in writing that the property shall be transported and used in the manner required in this subdivision. The certificate shall be substantially in the form prescribed by the department. A seller is not liable for the sales tax if the seller accepts the certificate in good faith. If the seller does not have the certificate at the time the department requests the seller to submit the certificate to the department, the seller shall be given a reasonable time to request the foreign air carrier to provide the seller with the certificate. The foreign

air carrier shall maintain records in this state, such as a copy of a bill of lading, an air waybill, or cargo manifest, documenting its transportation of the tangible personal property to a foreign destination.

(c)There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of fuel and petroleum products to a water common carrier for immediate shipment outside this state for consumption in the conduct of its business as a common carrier after the first out-of-state destination. To qualify for the exemption the common carrier shall furnish to the seller an exemption certificate in writing stating the quantity of fuel and petroleum products claimed as exempt which is to be consumed after reaching the first out-of-state destination. That certificate shall bear the purchaser’s valid seller’s permit

number or valid fuel exemption registration number and shall be substantially in the form prescribed by the department. Acceptance in good faith of that certificate shall relieve the seller from liability for the sales tax.

(d)“First out-of-state destination,” as used in this section, means the first point reached outside this state by a common carrier in the conduct of its business as a common carrier at which cargo or passengers are loaded or discharged, cargo containers are added or removed, fuel is transferred, or docking fees are charged. “First out-of-state destination,” as used in this section, also includes the entry point of the Panama Canal when the carrier is only transiting the canal in the conduct of its business as a common carrier.

(e)“Common carrier,” as used

in this section, with respect to water transportation, shall be deemed to include any vessel engaged, for compensation, in transporting persons or property in interstate or foreign commerce.

(f)“Foreign air carrier,” as used in this section, means a foreign air carrier as defined in Section 40102 of Title 49 of the United States Code.

(g)“Immediate shipment,” as used in this section, means that the delivery of the fuel and petroleum products by the seller is directly into a ship for transportation outside this state and not for storage by the purchaser or any third party.

(h)A common carrier claiming exemption under subdivision (c) who is not required to hold a valid seller’s permit shall be required to

register with the department and obtain a fuel exemption registration number and shall be required to file returns as the department may prescribe if either the department notifies the carrier that returns must be filed or the carrier is liable for taxes based upon consumption of fuel erroneously claimed as exempt under this section. A common carrier required to hold a fuel exemption registration number shall be subject to all applicable provisions of this part, Part 1.5 (commencing with Section 7200), and Part 1.6 (commencing with Section 7251).

(i)A common carrier claiming an exemption under subdivision (c), upon request, shall make available to the department records, including, but not limited to, a copy of a log abstract or a cargo manifest, documenting its transportation of the fuel or petroleum product to an out-of-state destination

and the amount claimed as exempt. If the carrier fails to provide these records upon request, the department may revoke the carrier’s fuel exemption registration number.

(j)The department may require any carrier claiming an exemption under this section and required to obtain a fuel exemption registration number to place with it that security as the department may determine pursuant to Section 6701.

(k)Pursuant to subdivisions (a), (b), and (c), any use of the property by the purchasing carrier, other than that incident to the delivery of the property to the carrier and the transportation of the property by the carrier to the first out-of-state destination and subsequent use in the conduct of its business as a common carrier, or a failure of the carrier to document its

transporting the property to the first out-of-state destination, shall subject the carrier to liability for payment of sales tax as if it were a retailer making a retail sale of the property at the time of that use or failure, and the sales price of the property to it shall be deemed to be the gross receipts from the retail sale.

(l)For the purpose of complying with Section 41, the Legislature finds and declares all of the following with respect to the exemption extended by the act adding this subdivision:

(1)The specific goal that the exemption will continue to achieve is to ensure fueling will continue to be a robust economic activity in the state and adhere to tax policy and rationale of first substantial use occurring out of state.

(2)Detailed performance indicators measuring whether the exemption meets the goal described in paragraph (1) are the following:

(A)The average monthly maritime fuel price at all domestic and international Pacific seaports.

(B)The average monthly maritime fuel price at California seaports.

(C)Maritime fuel deliveries at California seaports.

(3)On or before January 1, 2026, the Legislative Analyst’s Office shall analyze the performance indicators described in paragraph (2) and shall report its findings, pursuant to Section 9795 of the Government Code, to the Legislature.

(m)This section shall remain in effect only until

January 1, 2029, and as of that date is repealed.

Future Version

Amended (as amended by Stats. 2012, Ch. 293, Sec. 2) by Stats. 2023, Ch. 442, Sec. 2. (AB 543) Effective October 8, 2023. Section operative January 1, 2029, by its own provisions.

(b)There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property, other than aircraft fuel and petroleum products, purchased by a foreign air

carrier and transported by the foreign air carrier’s facilities to a foreign destination for use by the air carrier in the conduct of its business as a common carrier by air of persons or property. To qualify for this exemption, the foreign air carrier shall furnish to the seller a certificate in writing that the property shall be transported and used in the manner required in this subdivision. The certificate shall be substantially in the form prescribed by the department. A seller is not liable for the sales tax if the seller accepts the certificate in good faith. If the seller does not have the certificate at the time the department

requests the seller to submit the certificate to the

department, the seller shall be given a reasonable time to request the foreign air carrier to provide the seller with the certificate. The foreign air carrier shall maintain records in this state, such as a copy of a bill of lading, an air waybill, or cargo manifest, documenting its transportation of the tangible personal property to a foreign destination.

(c)“Common carrier,” as used in this section, with respect to water transportation, shall be deemed to include any vessel engaged, for compensation, in transporting persons or property in interstate or foreign commerce.

(d)“Foreign air carrier,” as used in this section, means a foreign air carrier as defined in Section 40102 of Title 49 of the United States Code.

(e)Pursuant to subdivisions (a) and (b), any use of the

property by the purchasing carrier, other than that incident to the delivery of the property to the carrier and the transportation of the property by the carrier to an out-of-state destination and subsequent use in the conduct of its business as a common carrier, or a failure of the carrier to document its transporting the property to an out-of-state destination, shall subject the carrier to liability for payment of sales tax as if it were a retailer making a retail sale of the property at the time of that use or failure, and the sales price of the property to it shall be deemed to be the gross receipts from the retail sale.

(f)This section shall become operative on January 1, 2029.

§ 6386

Amended by Stats. 1970, Ch. 547.

There are exempted from the computation of the amount of the sales tax the gross receipts from the sale in this state of tangible personal property to a holder of a valid seller’s permit issued under Section 6067 when the property is used by the purchaser outside of this state in his performance of a contract to improve real property and, as a result of such use, is incorporated into and becomes a part of real property located outside of this state. This exemption shall apply only if the purchaser certifies in writing to the seller, in such form as the board may prescribe, that the property will be used in a manner and for a purpose herein specified.

§ 6387

Added by Stats. 1955, Ch. 1505.

There are exempted from the computation of the amount of the sales tax the gross receipts from sales of tangible personal property purchased for use solely outside this State and delivered to a forwarding agent, export packer, or other person engaged in the business of preparing goods for export or arranging for their exportation, and actually delivered to a port outside the continental limits of the United States prior to making any use thereof.

§ 6388

Amended by Stats. 1983, Ch. 1286, Sec. 5.

Where a new or remanufactured truck, truck tractor, semitrailer, or trailer, any of which has an unladen weight of 6,000 pounds or more, or a new or remanufactured trailer coach or a new or remanufactured auxiliary dolly, is purchased from a dealer located outside this state for use without this state and is delivered by the manufacturer or remanufacturer to the purchaser within this state, and the purchaser drives or moves the vehicle from the manufacturer’s or remanufacturer’s place of business in this state to any point outside this state within 30 days from and after the date of the delivery, there are exempted from the taxes imposed by this part

the gross receipts from the sale of and the storage, use or other consumption of the vehicle within the state, if the purchaser furnishes the following to the manufacturer or remanufacturer:

(a)Written evidence of an out-of-state registration for the vehicle.

(b)The purchaser’s affidavit attesting that he or she is not a resident of California and that he or she purchased the vehicle from a dealer at a specified location without the state for use outside this state.

(c)The purchaser’s affidavit that the vehicle has been moved or driven to a point outside this state within 30 days of the date of the delivery of the vehicle to him or her.

§ 6388.3

Added by Stats. 1985, Ch. 1152, Sec. 1.

The State Board of Equalization shall prepare and distribute a standard form or forms for the purchaser affidavit required by Sections 6388 and 6388.5.

§ 6388.5

Current Version

Amended (as amended by Stats. 2020, Ch. 371, Sec. 28) by Stats. 2023, Ch. 427, Sec. 1. (AB 314) Effective October 8, 2023. Repealed as of January 1, 2029, by its own provisions. See later operative version, as amended by Sec. 2 of Stats. 2023, Ch. 427.

(a)Notwithstanding Section 6388, if a new, used, or remanufactured truck or a new, used, or remanufactured trailer or semitrailer, any of which has an unladen weight of 6,000 pounds or more that has been manufactured or remanufactured outside this state is purchased for use without this state and is delivered by the manufacturer, remanufacturer, or dealer to the purchaser within this state, and the purchaser drives or moves the vehicle to any point outside this state within 30 days from and after the date of delivery, or whenever a new, used, or remanufactured truck or a new, used,

or remanufactured trailer or semitrailer, any of which has an unladen weight of 6,000 pounds or more that has been manufactured or remanufactured in this state is purchased for use without this state and is delivered by the manufacturer, remanufacturer, or dealer to the purchaser within this state, and the purchaser drives or moves the vehicle to any point outside this state within 75 days from and after the date of delivery, there are exempted from the taxes imposed by this part, Part 1.5 (commencing with Section 7200), and Part 1.6 (commencing with Section 7251) the gross receipts from the sale of and the storage, use, or other consumption of the vehicle within the state, if the purchaser or the purchaser’s agent furnishes all of the following to the manufacturer, remanufacturer, or dealer:

(1)(A) Written evidence of an out-of-state license and registration for the vehicle.

(B)If the vehicle is subject to the permanent trailer identification plate program under Section 5014.1 of the Vehicle Code and is used exclusively in interstate or foreign commerce, or both, written evidence of the purchaser’s or lessee’s United States Department of Transportation number or Unified Carrier Registration System filing may be substituted for the written evidence described in subparagraph (A).

(C)If the vehicle is registered under the International Registration Plan pursuant to Section 8052 of the Vehicle Code and is used exclusively in interstate or foreign commerce, or both, written evidence of the purchaser’s or lessee’s United States Department of Transportation

number or Unified Carrier Registration System filing may be substituted for the written evidence described in subparagraph (A).

(2)The purchaser’s affidavit attesting that the purchaser purchased the vehicle from a dealer at a specified location for use exclusively outside this state, or exclusively in interstate or foreign commerce, or both.

(3)The purchaser’s affidavit that the vehicle has been moved or driven to a point outside this state within the appropriate period of either 30 days or 75 days of the date of the delivery of the vehicle to the purchaser.

(b)For the purpose of complying with Section 41, the Legislature declares the following with respect to the extension of the exemption by this section and

the application of this section to the sale of a used trailer or semitrailer:

(1)(A) The goal of this section, as amended by Chapter 226 of the Statutes of 2019 and the act adding this subdivision, is to bring, and continue to bring, parity to the law regulating interstate commerce and to allow commercial trucks to meet the same requirements as commercial trailers that are purchased in the state for use either entirely outside the state or strictly in interstate commerce.

(B)The goal of this section, as amended by the act adding this subdivision, is also to bring parity to the law with respect to used trailers and semitrailers.

(2)The goal of this policy is to increase sales of commercial trucks

and used trailers and semitrailers that have an unladen weight of 6,000 pounds or more that will be used in interstate commerce.

(c)This section shall become inoperative on January 1,

2029, and as of that date is repealed.

Future Version

Amended (as amended by Stats. 2020, Ch. 371, Sec. 29) by Stats. 2023, Ch. 427, Sec. 2. (AB 314) Effective October 8, 2023. Section operative January 1, 2029, by its own provisions.

(a)Notwithstanding Section 6388, if a new or remanufactured trailer or semitrailer with an unladen weight of 6,000 pounds or more that has been manufactured or remanufactured outside this state is purchased for use without this state and is delivered by the manufacturer, remanufacturer, or dealer to the purchaser within this state, and the purchaser drives or moves the vehicle to any point outside this state within 30 days from and after the date of delivery, or whenever a new or remanufactured trailer or semitrailer with an unladen weight of 6,000 pounds

or more that has been manufactured or remanufactured in this state is purchased for use without this state and is delivered by the manufacturer, remanufacturer, or dealer to the purchaser within this state, and the purchaser drives or moves the vehicle to any point outside this state within 75 days from and after the date of delivery, there are exempted from the taxes imposed by this part, Part 1.5 (commencing with Section 7200), and Part 1.6 (commencing with Section 7251) the gross receipts from the sale of and the storage, use, or other consumption of the vehicle within the state, if the purchaser or the purchaser’s agent furnishes all of the following to the manufacturer, remanufacturer, or dealer:

(1)(A) Written evidence of an out-of-state license and registration for the vehicle.

(3)The purchaser’s affidavit that the vehicle has been moved or driven to a point outside this

state within the appropriate period of either 30 days or 75 days of the date of the delivery of the vehicle to the purchaser.

(b)This section shall become operative on January 1,

2029.

§ 6390

Added by Stats. 1965, 1st Ex. Sess., Ch. 2.

There are exempted from the computation of the amount of the sales tax the rentals payable under a lease of tangible personal property (a) when such rentals are required to be included in the measure of the use tax or (b) when such property is situated outside this state.

§ 6391

Amended by Stats. 1967, Ch. 832.

There are exempted from the computation of the amount of the sales tax the rentals payable under a lease of tangible personal property for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to August 1, 1965, and the lessor did not elect under Sections 6094 or 6244 to pay use tax measured by the amount of the rental charge. The lessor shall be deemed not to be obligated for any period of time for which he has the unconditional right to terminate the lease upon notice, whether or not the right is exercised.

§ 6396

Added by Stats. 1970, Ch. 1457.

There are exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property which, pursuant to the contract of sale, is required to be shipped and is shipped to a point outside this state by the retailer by means of:

(a)facilities operated by the retailer, or (b) delivery by the retailer to a carrier, customs broker or forwarding agent, whether hired by the purchaser or not, for shipment to such out-of-state point.

For purposes of this section, the term “carrier” shall mean a person or firm engaged in the business of transporting

for compensation tangible personal property owned by other persons, and includes both common and contract carriers. The term “forwarding agent” shall mean a person or firm engaged in the business of preparing property for shipment or arranging for its shipment.