Laws, Regulations and Annotations


Business Taxes Law Guide – Revision 2023

Sales And Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 4. Exemptions

Article 2. Exemptions from Sales Tax

Section 6384

6384. United States contractors. 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.

History—Stats. 1955, p. 1396, in effect September 7, 1955, added "in this State".

Note.—See also Section 6007.5.

Application of different rules to United States contractors not invalid.—Where the Board distinguishes between contractors generally and United States government contractors in the application of tax, such differences are not invalid because the United States government has a unique tax status. Honeywell, Inc. v. State Board of Equalization (1975) 48 Cal.App.3d 907.

Constitutionality.—California has the constitutional power to impose sales and use taxes on contractors in relation to work performed at Federal facilities located in California because Congress has expressly consented to such tax in the Buck Act (4 U. S. C. 105) and has thereby waived the sovereign immunity of the United States. C. R. Fedrick, Inc. v. State Board of Equalization (1974) 38 Cal.App.3d 385, cert. denied (1975) 42 L.Ed.2d 820.

Electrical Transmission Line.—A contract with the United States to replace cable as a component of an electrical transmission line is a contract for the construction of improvements to real estate. Sales of materials to and purchases of materials by contractors for use under such contracts are subject to tax. Chula Vista Electric Co. v. State Board of Equalization (1975) 53 Cal.App.3d 445.

Federal contractors as consumers.—Sales and Use Tax Law does not levy a direct tax on United States, where tax is imposed on transfer of property between supplier and federal contractor. Board regulation classifying federal contractors as consumers of materials and fixtures is consistent with sections 6007.5 and 6384 and does not discriminate between federal contractors and other federal suppliers. Howell, In re (1984) 731 F.2d 624, cert. den._U.S._.

Modification of facilities for separation and distribution of petroleum and natural gas.—Tank settings, pipelines and compressor stations used by a contractor in reconditioning a naval petroleum facility for the United States were taxable fixtures because they were essential to the structure and of a permanent nature. The term "machinery and equipment" excludes "fixtures" as defined under property tax law. C. R. Fedrick, Inc. v. State Board of Equalization (1988) 204 Cal.App.3d 252.

Taxes on Federal Government contractors.—Federal Government contractors are not immune from state taxes simply because the government reimburses all of the contractors' state tax expenditures. Immunity from state taxation is appropriate only when the levy falls directly on the United States itself or on an agency or instrumentality so closely connected to the Federal Government that the two cannot realistically be viewed as separate entities. Also, contrary to its argument that it was not bound by the state's statutes of limitations, the United States, as subrogee of its contractor, is bound by California's statutory claims procedures. (United States v. California (1993) 507 U.S. 746, 123 L.Ed.2d 528.)