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BTLG Table of Contents > Sales and Use Tax Court Decisions > F > First American Title Insurance Company v. California Department of Tax and Fee Administration … (2021)

Sales And Use Tax Court Decisions

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First American Title Insurance Company v. California Department of Tax and Fee Administration … (2021)

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Insurer’s State Constitutional Exemption For Sales and Use Tax Does Not Forbid the Imposition of Sales Tax On the Lessor For Leases To Insurers Constituting a Continuing Sale and Purchase of Equipment Located in California, For Which the Insurer/Lessee Paid Sales Tax Reimbursement To the Lessor.

Title insurer petitioned for writ of mandate seeking an order compelling CDTFA to vacate Regulation 1660, subdivision (c)(1), which provides, in the case of any lease of tangible personal property that is situated in California that is a continuing sale and purchase, sales tax is imposed on the lessor if the lessee is exempt from use tax. Petitioner argued that the regulation violates California Constitution article XIII, section 28, subdivision (f), which exempts insurers from sales and use tax, arguing that its leases of equipment are not subject to tax on any basis, including sales tax imposed on lessors. The court of appeal held that the California Constitution does not prohibit a sales tax whose legal incidence is on a lessor of equipment to a title insurer, even though the economic burden of the tax is ultimately borne by the title insurer/lessee. First American Title Insurance Company v. California Department of Tax and Fee Administration (2021) 71 Cal.App.5th 603.