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Business Taxes Law Guide—Revision 2024

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Sales And Use Tax Law

Revenue and Taxation Code

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

Article 1. General Exemptions

6351. "Exempted from the taxes imposed by this part." "Exempted from the taxes imposed by this part," as used in this article, means, in case of the sales tax, exempted from the computation of the amount of tax imposed.

6352. Constitutional exemptions. There are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this State of tangible personal property the gross receipts from the sale of which, or the storage, use, or other consumption of which, this State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of this State.

Gross receipts from sales to federal land bank not taxable.—Gross receipts from sales made by a retailer of tangible personal property to the Federal Land Bank, the Federal Intermediate Credit Bank, the Bank of Cooperatives, and the Production Credit Corporation are not subject to sales tax, as the sales are to instrumentalities of the federal government. M. G. West Co. v. Johnson (1937) 20 Cal.App.2d 95. But see Western Lithograph Co. v. State Board of Equalization (1938) 11 Cal.2d 156, 777.

Gross receipts from sales by national park concessionaire subject to tax.—A private corporation operating in Yosemite National Park as a lessee and consessionaire of the United States Government is required to pay sales tax with respect to its retail sales made within the park. Yosemite Park and Curry Co. v. Johnson (1938) 10 Cal.2d 770.

Gross receipts from sales to banks subject to tax.—Retailers are required to pay sales tax upon their receipts from retail sales of tangible personal property to national banks, even though it be assumed that such banks are instrumentalities of the United States Government, and notwithstanding the provisions of Section 16 of Article XIII of the State Constitution, limiting and prescribing the extent to which and the methods by which banks may be taxed. Western Lithograph Co. v. State Board of Equalization (1938) 11 Cal.2d 156, 777.

Sales of fuel oil to interstate railroad.—Sales to railroad companies of fuel oil delivered to the railroad companies in California and transported outside of California by the purchasers for use outside of California are intrastate transactions the receipts from which are subject to sales tax. Standard Oil Co. v. Johnson (1942) 56 Cal.App.2d 411. For previous opinion to the contrary, see Standard Oil Co. v. Johnson (1939) 33 Cal.App.2d 430. The sales tax is not applicable to receipts from sales of fuel oil to a railroad company pursuant to a contract requiring delivery of the oil at points outside this state, the oil being delivered to the railroad in this state and shipped to the out-of-state points f.o.b. destination under standard bills of lading specifying such out-of-state destination with the buyer named as consignee and with freight charges prepaid by the seller. Standard Oil Co. v. Johnson (1944) 24 Cal.2d 40.

Property purchased for use in interstate commerce.—The application of the use tax to the storage or installation of equipment purchased for use in carrying on an interstate commerce business does not violate the commerce clause of the Federal Constitution. Southern Pacific Co. vs. Gallagher (1939) 306 U.S. 167; Pacific Telephone and Telegraph Co. v. Gallagher (1939) 306 U.S. 182.

The imposition of the California use tax upon switch engines purchased outside of the state and brought into the state for ultimate use in interstate commerce does not violate the commerce clause of the Federal Constitution. Atchison, Topeka and Santa Fe Railway Co. v. State Board of Equalization (1956) 139 Cal.App.2d 411.

Property taxed in the state of the first substantial use will not constitute multiple taxation by reason of previous formal use in two states, neither of which imposed such a tax. Western Pacific RR Co. v. State Board of Equalization (1963) 213 Cal.App.2d 20.

Use of property shipped in interstate commerce.—The imposition of the use tax on materials shipped to California by an Illinois corporation engaged in the manufacture of tanks, the materials being shipped and stored here preparatory to their use in the assembly of such tanks in California, does not constitute an unconstitutional burden on interstate commerce nor a regulation thereof. Chicago Bridge and Iron Co. v. Johnson (1941) 19 Cal.2d 162.

Educational institutions.—Educational institutions of collegiate grade, not conducted for profit, which purchase and use property exclusively for purposes of education, are not exempted by this section or Section 1a of Article XIII of the California Constitution, from payment of the use tax. California Institute of Technology v. Johnson (1942) 55 Cal.App.2d 856.

Sales for export.—The sales tax does not apply to a sale of oil to a foreign purchaser for shipment abroad, delivered to a vessel furnished by the purchaser and actually carried to a foreign destination, title and control of the oil passing to the foreign purchaser upon delivery, and no portion of the oil being used or consumed in the United States. Richfield Oil Corp. v. State Board of Equalization (1946) 329 U.S. 69.

The sale of an ocean-going vessel of American registry docked in a California port to an alien purchaser, including the change of registry and flag, for use in foreign commerce is exempt from sales tax by virtue of the import-export clause of the Federal Constitution. Matson Navigation Co. v. State Board of Equalization (1955) 136 Cal.App.2d 577; Alaska Packers Ass'n v. State of California (1955) 136 Cal.App.2d 586; Pope and Talbot, Inc. v. State Board of Equalization (1960) 181 Cal.App.2d 721.

Political subdivisions.—A levy by the state of a sales tax or use tax upon one of its political subdivisions is not invalid as a levy on public money. People v. Imperial County (1946) 76 Cal.App.2d 572.

Sales tax on interstate shipment.—The commerce clause of the Federal Constitution does not prohibit the imposition of a sales tax on a sale by a California retailer to a California consumer where the merchandise is ordered by the retailer from an out-of-state supplier and the supplier ships from a point outside California directly to the consumer in California, title passing at the destination point. Meyer v. State Board of Equalization (1954) 42 Cal.2d 376.

Where an Ohio manufacturer, maintaining permanent office, shop and service facilities in California, sold vaults and equipment to banks in California, title passing after delivery to buyer in California, the sales occurred in California and were not immune from taxation under the commerce clause. Diebold, Inc. v. State Board of Equalization (1959) 168 Cal.App.2d 628.

Property installed in this state.—If automatic control equipment is stored in this state and installed in a locomotive in this state prior to being used in interstate commerce, the subsequent use of the equipment as a permanent part of the locomotive operating solely in interstate commerce, both within and outside this state, and actual functional use of the equipment solely outside this state affords no basis for exemption from use tax on constitutional grounds. Atchison, Topeka and Santa Fe Railway Co. v. State Board of Equalization (1955) 131 Cal.App.2d 677.

Out-of-state use.—The imposition of sales or use tax upon tangible personal property purchased for use outside of the state does not violate the commerce clause of the United States Constitution, where the property is purchased, stored, and fabricated in California. Levine v. State Board of Equalization (1956) 142 Cal.App.2d 760.

Aircraft.—Aircraft purchased by an airline from the Federal Government both in this state and outside this state and brought to the airline's home base in this state without carrying a payload and retained at the home base for an indefinite period of time prior to being placed in service in interstate commerce are subject to use tax. Flying Tiger Line Inc. v. State Board of Equalization (1958) 157 Cal.App.2d 85.

Imports.—The import-export clause of the Federal Constitution does not prohibit application of use tax to the use in this state of a yacht purchased abroad, after its original import packaging is removed and it is put to the use for which it was imported. Sugarman v. State Board of Equalization (1958) 51 Cal.2d 361.

Exports.—Where goods are sold to a purchaser for export to and use in a foreign country and pursuant to the contract the retailer delivers the goods by truck to an export packer hired, directed and paid by the purchaser and after packing the export packer delivers the goods by truck to a pier from which they are loaded on a ship and transported to the foreign country and used there by the purchaser, the export process begins when the goods leave the retailer's warehouse and the import-export clause of the Federal Constitution therefore prohibits the application of sales tax to the sale. Gough Industries, Inc. v. State Board of Equalization (1959) 51 Cal.2d 746, cert. den. (1959) 359 U.S. 1011.

Foreign purchaser.—A sale of repair parts in connection with a contract to overhaul an airplane for a foreign airline is subject to sales tax where the airplane is redelivered to the owner in this state and the owner's crew flies the airplane from this state. Flying Tiger Line, Inc. v. State Board of Equalization (1958) 157 Cal.App.2d 85.

Insurance companies not exempted.—An insurance company is not relieved from its duty to collect or pay a use tax by virtue of § 6352, when it sells automobiles belonging to it to private individuals, since the use tax is imposed on the ultimate purchaser, not the insurance company. Beneficial Standard Life Ins. Co. v. State Board of Equalization (1962) 199 Cal.App.2d 18.

Sale outside state and leased back instate.—Where a California retailer sold two oil tankers with title and possession passing out of state and the vessels were immediately leased back to the retailer and were used in California in intrastate commerce, the imposition of use tax was not an undue burden on interstate commerce nor a violation of due process under the United States Constitution. Union Oil Co. v. State Board of Equalization (1963) 60 Cal.2d 441, appeal dismissed (1964) 377 U.S. 404.

Sales of bunker fuel to steamship lines.—Bunker fuel oil sold for consumption by vessels of foreign and domestic registry on voyages to foreign or domestic ports does not constitute an export or an interstate sale, and the application of sales tax is not prohibited by the export-import clause or the commerce clause of the United States Constitution. Shell Oil Co. v. State Board of Equalization (1966) 64 Cal.2d 713, appeal dismissed (1967) 386 U.S. 211.

Sales to national banks properly taxed.—The imposition of sales tax on sales to national banks was permitted by Congress when California did not impose another tax on a built-up rate in lieu of the sales tax. United States v. State Board of Equalization (1980) 639 F.2d 458.

Sales Tax Unconstitutional When Imposed on Nonprofit Religious Activities.—As a tax on privilege, sales tax could not constitutionally be imposed on nonprofit religious organization's sales of religious materials. However, use tax and collection of use tax may be imposed on the organization for those sales. Institute in Basic Youth Conflicts, Inc. v. State Board of Equalization (1985) 166 Cal.App.3d 1093.

Liquidation sales by trustees in bankruptcy.—A nondiscriminatory tax on a bankruptcy liquidation sale is not barred by the now discredited intergovernmental tax immunity doctrine, and there is no longer any constitutional impediment to imposition of a sales tax or a use tax on a bankruptcy liquidation sale. The sales and use tax does not discriminate against a bankruptcy trustee or those that they deal with, and the bankruptcy trustee is not so closely connected to the federal government that the two cannot be viewed as separate entities. California State Board of Equalization v. Sierra Summit, Inc. (1989) 490 U.S. 844.

Religious books, tapes and records.—Application of sales and use tax to the sales of religious books, tapes and records did not violate the Free Exercise Clause or Establishment Clause of the First Amendment. Jimmy Swaggart Ministries v. Board of Equalization of California (1990) 493 U.S. 378; 107 L.Ed.2d 796.

Sales for export.—A sale of aircraft parts to a Mexican airline to serve its planes is not subject to tax where the parts are shipped by a common carrier to a location on the U.S. Mexican border where an independent freight forwarder, with the assistance of the airline's employees, processed the property through U.S. and Mexican Customs and the parts were moved on a continuous and unbroken journey to the foreign destination other than for unavoidable delays that were incidental to their journey. McDonnel Douglas Corporation v. State Board of Equalization (1992) 10 Cal.App.4th 1413.

6353. Gas, electricity, and water. There are exempted from the taxes imposed by this part the gross receipts derived from the sales, furnishing, or service of and the storage, use, or other consumption in this state of, of all of the following:

(a) Gas, electricity, and water, including steam and geothermal steam, brines, and heat, when delivered to consumers through mains, lines, or pipes.

(b) (1) Liquefied petroleum gas, delivered to a qualified residence by the seller, that is sold for household use in the qualified residence, or liquefied petroleum gas that is purchased for use by a qualified person to be used in producing and harvesting agricultural products; provided, in either case, the liquefied petroleum gas is delivered into a tank with a storage capacity for liquefied petroleum gas that is equal to or greater than 30 gallons. This subdivision may not be construed to provide any exemption from any tax levied by a city, county, or city and county pursuant to Section 7284.3, or any successor to that section.

(2) For purposes of this subdivision:

(A) "Qualified residence" means a primary residence, not serviced by gas mains and pipes.

(B) "Qualified person" means any person engaged in a line of business described in Codes 0111 to 0291, inclusive, of the Standard Industrial Classification Manual published by the United States Office of Management and Budget, 1987 Edition, and any other person that assists that person in the lines of business described in this paragraph in producing and harvesting agricultural products.

(c) Water when sold to an individual in bulk quantities of 50 gallons or more, for general household use in his or her residence if the residence is located in an area not serviced by mains, lines or pipes.

(d) Exhaust steam, waste steam, heat, or resultant energy, produced in connection with cogeneraton technology, as defined in Section 25134 of the Public Resources Code.

(e) The exemptions provided by subdivision (b) shall be effective starting September 1, 2001.

History—Stats. 1972, Ch. 402, in effect October 1, 1972, added the household water exemption. Stats. 1978, Ch. 1010, effective January 1, 1979, added "and of exhaust steam, waste steam, heat, or resultant energy, produced in connection with cogeneration technology, as defined in Section 25134 of the Public Resources Code." to the last sentence. Stats. 1986, Ch. 420, in effect July 17, 1986, added reference to "steam and geothermal steam, brines, and heat". Stats. 2001, Ch. 156 (AB 426), in effect August 7, 2001, operative September 1, 2001, added "derived" after "gross receipts", added ", all of the following:" after "in this state of", in the first paragraph added subdivision letter designation (a) after "in this state of", substituted "Gas" for "gas" after "(a)" therein, added subdivision (b), added subdivision letter designation (c) after "or pipes, and" and substituted "Water" for "water" after "(c)" therein, added a comma after "gallons or more", added subdivision letter designation (d) after "or pipes, and of" therein, and substituted "Exhaust" for "exhaust" after "or pipes and of" therein, and added subdivision (e). Stats. 2011, Ch. 727 (AB 242), in effect January 1, 2012, deleted ", unless the State Board of Equalization determines that implementation by that date is not feasible, in which case the board shall, on or before that date, report to the Legislature regarding the reasons why it must delay implementation, and shall thereafter implement these exemptions no later than October 1, 2001" after "September 1, 2001" in subdivision (e).

Note.—Stats. 1986, Ch. 420 expressed the intent of the Legislature that the provisions of this act codify the longstanding administrative practice of the State Board of Equalization which interprets Section 6353 of the Revenue and

Taxation Code as exempting steam from sales and use taxation. Therefore, it is the intent of the Legislature that these provisions do not constitute a change in, but are declaratory of, the existing law.

Delivery of Liquefied Petroleum Gas by Hose from Vendor's Tank Truck to Buyer's Storage Tank is not Exempt. Delivery of Gas through Mains, Lines, or Pipes.—Plaintiff Standard Oil Company of California brought suit for refund of use tax which it had paid on liquefied petroleum gas (LPG) which it had used. The claim for refund was based on Revenue and Taxation Code Section 6353 which exempts from tax the use of "gas, electricity, and water when delivered to consumers through mains, lines, or pipes." The Board has long construed this section as not including within its exemption from taxation, sales or use of substances emptied from vendor's vehicles by means of hoses.

The LPG was transported by the vendor's tank truck to plaintiff's storage facility and delivered by passing it from the truck to plaintiff's container through the vendor's flexible high pressure tube or hose. Plaintiff claimed that LPG was a gas, even though delivered in liquid form, and that the delivery from the truck to the storage tank was through a main, line, or pipe. The trial court upheld plaintiff's contention.

The District Court of Appeal reversed the judgment and upheld the Board's construction of the statute. The court first observed that the Board's construction was entitled to great weight and was not to be overturned unless clearly erroneous or unauthorized. Using dictionary definitions the court found that mains, lines, and pipes did not necessarily include hoses and that a later amendment of the statute indicated that the Legislature, in its use of the words "mains, lines, or pipes," meant fixed "mains, lines, or pipes" as ordinarily service a geographical area with utility service. Further noting that statutes granting exemptions from taxation must be reasonably, but strictly, construed against the taxpayer, the court found that the Board's construction was neither clearly erroneous nor unauthorized.

The court distinguished a 1943 opinion of the Attorney General which exempted sales of gas through installations placed by a public utility on the premises of gas consumers. In that situation as many as 24 customers were connected with each installation by means of pipes owned by the customers, the tanks and their contents were owned by the utility, there was continuous "delivery" through the "pipes" from the tank, and the flow to the customer was through the utility's meter into the customer's pipe and gas consumption devices.

Since the court held that plaintiff's use of LPG, following its delivery under the circumstances of the appeal, was not exempted from taxation, it was unnecessary to determine whether the LPG, a liquid throughout its delivery by tank truck and hose, was a "gas" within the meaning of Secton 6353. Standard Oil Company of California v. State Board of Equalization (1974) 39 Cal.App.3d 765.

Geothermal steam exemption retroactive.—The 1986 legislation which expressly exempted geothermal steam was intended to have retroactive effect. The retroactive exemption was not a constitutionally prohibited gift of public funds since it served an important public purpose of promoting alternative energy. County of Sonoma v. State Board of Equalization (1987) 195 Cal.App.3d 982.

6354. Gold. There are exempted from the taxes imposed by this part, the gross receipts from the sales of commemorative "California Gold" medallions produced and sold in accordance with Chapter 25 (commencing with Section 7551) of Division 7 of Title 1 of the Government Code, and the storage, use, or other consumption in this state of commemorative "California Gold" medallions so produced and sold.

History—Added by Stats. 1985, Ch. 1082, effective September 27, 1985 until January 1, 1988, and as of such date is repealed unless a later enacted statute, which is enacted before that date deletes or extends that date. Stats. 1987, Ch. 1095, in effect September 25, 1987, deleted second paragraph which provided, "This section shall remain in effect only until January 1, 1988, and as of that date is repealed unless a later enacted statute, which is enacted before that date deletes or extends the date."

6355. Monetized bullion. [Repealed by Stats. 1993, Ch. 977, in effect October 11, 1993.]

6355. Monetized, nonmonetized bullion, and numismatic coins. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale in bulk of monetized bullion, nonmonetized gold or silver bullion, and numismatic coins that are substantially equivalent to transactions in securities or commodities through a national securities or commodities exchange and the storage, use, or other consumption in this state of monetized bullion, nonmonetized gold or silver bullion, and numismatic coins so sold.

(b) (1) A sale in bulk, for purposes of this section, shall be deemed to have occurred if the amount of monetized bullion, nonmonetized gold or silver bullion, and numismatic coins sold in the transaction totals, in market value, the sum of one thousand dollars ($1,000) or more, or its equivalent.

(2) The department shall adjust the one thousand dollar ($1,000) amount specified in paragraph (1) as follows:

(A) On or before September 1, 1994, and on or before each October 1 of each year thereafter, the department shall multiply the amount applicable for the current calendar year by the inflation factor adjustment determined by the Franchise Tax Board pursuant to subdivision (h) of Section 17041, the resulting amount to be the applicable amount for the succeeding calendar year. The applicable amount shall be operative as an adjustment of the amount specified in paragraph (1) only when the applicable amount computed is equal to or exceeds a new operative threshold, as defined in subparagraph (C).

(B) When the applicable amount equals or exceeds an operative threshold specified in subparagraph (C), the resulting applicable amount, rounded to the nearest multiple of five hundred dollars ($500), shall be operative for purposes of paragraph (1) beginning January 1 of the succeeding calendar year.

(C) For purposes of this paragraph, "operative threshold" means an amount that exceeds by at least five hundred dollars ($500), the greater of either the amount specified in paragraph (1) or the amount computed pursuant to subparagraphs (A) and (B) as the operative adjustment to the amount specified in paragraph (1).

(3) Notwithstanding paragraph (2), the following shall apply:

(A) The January 1, 2023, increase in the operative threshold pursuant to paragraph (2) shall be operative July 1, 2023.

(B) Beginning on or after January 1, 2024, increases in the operative threshold pursuant to paragraph (2) shall be operative the first day of the second calendar quarter beginning after the effective date of amendments incorporating the increase in the operative threshold into the department’s regulations.

(c) "Monetized bullion," for purposes of this section, means coins or other forms of money manufactured of gold, silver, or other metal and heretofore, now, or hereafter used as a medium of exchange under the laws of this state, the United States, or any foreign nation. "Monetized bullion," for purposes of this section, also means gold medallions struck under authority of the American Arts Gold Medallion Act (Title IV of Public Law 95-630).

(d) A sale of monetized bullion, nonmonetized gold or silver bullion, or numismatic coins, for purposes of this section, shall be deemed to be substantially equivalent to a transaction in securities or commodities through a national securities or commodities exchange, if the sale is by or through a person registered pursuant to the Commodity Exchange Act (7 U.S.C. Sec. 1 et seq.) or not required to be registered under the Commodity Exchange Act.

History—Added by Stats. 1973, Ch. 1019, operative January 1, 1974. Stats. 1980, Ch. 849, operative January 1, 1980, substituted the part of (d) following "through a person" for former wording. Stats. 1983, Ch. 1158, in effect September 28, 1983, added the second sentence in subdivision (c). Stats. 1985, Ch. 1128, effective January 1, 1986, until January 1, 1991, and as of such date is repealed unless a later enacted statute, which is enacted before that date deletes or extends that date. Upon repeal, section as it existed prior to enactment of this temporary provision shall have the same force and effect as if this temporary provision had not been enacted. Added "nonmonetized gold … numismatic coins" after "monetized bullion" in subdivisions (a), (b), and (d), substituted "market value" for "face amount" in subdivision (b), and deleted subdivision (e) and added new subdivision (e). Stats. 1990, Ch. 1042, in effect September 19, 1990, operative January 1, 1991, substituted "1994" for "1991" in the first sentence of subdivision (e), and deleted second sentence of subdivision (e), which provided, "If that date is not deleted or extended, then, on and after January 1, 1991, pursuant to Section 9611 of the Government Code, Section 6355 of the Revenue and Taxation Code, as amended by Section 1 of Chapter 1158 of the Statutes of 1983, shall have the same force and effect as if this temporary provision had not been enacted." Stats. 1993, Ch. 977, in effect October 11, 1993, substituted "that" for "which" after "numismatic coins" in subdivision (9); added "(1)" after "(b)"; added paragraph (2) and subparagraphs (2)(A), (2)(B) and (2)(C) to subdivision (b); added subdivision (c); and deleted subdivision (e) which contained a sunset clause which would have repealed the section effective January 1, 1994. Stats. 1994, Ch. 146, in effect January 1, 1995, substituted "sale" for "sales" after "from the" in subdivision (a). Stats. 2012, Ch. 184 (AB 843), in effect January 1, 2013, substituted "October" for "September" after "or before each" in subparagraph (A) of paragraph (2) of subdivision (b). Stats. 2023, Ch.511 (SB 889), in effect January 1, 2024, replaced "board" with "department" throughout; substituted "one thousand dollars" for "one-thousand-dollars" in paragraph (2) of subdivision (b); added paragraph (3) to subdivision (b).

Foreign Coins.—A sale of foreign coins is an exempt bulk sale if their market value is $1,000 or more in United States money. Alan Van Vliet Enterprises, Inc. v. State Board of Equalization (1977) 65 Cal.App.3d 964.

6356. Vessels. There are exempted from the sales tax the gross receipts from sales of vessels of more than 1,000 tons burden by the builders thereof.

History—Added by Stats. 1941, Ch. 36, effective January 1, 1942. Stats. 1985, Ch. 591, effective January 1, 1986, substituted "sales tax" for "taxes imposed by this part", and deleted "and the … this State" after "thereof."

Purchase in state of ship over 1000 tons burden.—A ship purchased outside California or in interstate commerce for use in the state may be constitutionally taxed. Hence, the sale of a ship of more than 1000 tons burden within the state is not with the conditional exemption from the use tax, which exemption is applicable if the imposition of a similar tax as respects a vessel purchased outside of California or in interstate commerce would be unconstitutional. In re Los Angeles Lumber Products Co., Ltd. (1942) 45 F.Supp. 77.

6356.5. Low-emission motor vehicles; retrofit devices. [Repealed. Became inoperative January 1, 1995 pursuant to the provisions of Ch. 990, Stats. 1989.]

6356.5. Farm equipment and machinery. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage and use of, or other consumption in this state of, farm equipment and machinery, and the parts thereof, purchased for use by a qualified person to be used primarily in producing and harvesting agricultural products.

(b) For purposes of this section, both of the following shall apply:

(1) "Qualified person" means any person engaged in a line of business described in Codes 0111 to 0291, inclusive, of the Standard Industrial Classification Manual published by the United States Office of Management and Budget, 1987 Edition, and any other person that uses farm equipment and machinery to assist this person in the lines of business described in this paragraph in producing and harvesting agricultural products.

(2) "Farm equipment and machinery" means implements of husbandry, as defined in Section 411.

(c) (1) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.

(2) Notwithstanding subdivision (a), the exemption established by this section does not apply with respect to any tax levied pursuant to Sections 6051.2 and 6201.2, or pursuant to Section 35 of Article XIII of the California Constitution.

(d) The exemption provided by this section shall be effective starting September 1, 2001.

History—Added by Stats. 2001, Ch. 156 (AB 426), in effect August 7, 2001, operative September 1, 2001. Stats. 2011, Ch. 727 (AB 242), in effect January 1, 2012, deleted ", unless the State Board of Equalization determines that implementation by that date is not feasible, in which case the board shall, on or before that date, report to the Legislature regarding the reasons why it must delay implementation, and shall thereafter implement the exemption provided by this section no later than October 1, 2001" after "September 1, 2001" in subdivision (d).

6356.6. Timber harvesting equipment. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage and use of, or other consumption in this state of, equipment and machinery designed primarily for off-road use in commercial timber harvesting operations, and the parts thereof, that is purchased for use by a qualified person to be used primarily in harvesting timber.

(b) The State Board of Equalization may adopt emergency regulations to specify equipment and machinery exempted by this section, and may revise those regulations from time to time.

(d) (1) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.

(2) Notwithstanding subdivision (a), the exemption established by this section does not apply with respect to any tax levied pursuant to Section 6051.2 and 6201.2, or pursuant to Section 35 of Article XIII of the California Constitution.

(e) The exemption provided by this section shall be effective starting September 1, 2001.

6357. Motor vehicle fuel—aviation gasoline. There are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this state of motor vehicle fuel used in propelling aircraft, except aircraft jet fuel, the distributions of which in this state are subject to the tax imposed by Part 2 (commencing with Section 7301) of this division and not subject to refund.

History—Stats. 1957, p. 2020, in effect September 11, 1957, added "and the use tax when applicable to the storage, use or other consumption of such fuel" to second paragraph. Stats. 1959, p. 4570, operative October 1, 1959, added "and liquefied petroleum gas the use of which is subject to the tax imposed by Part 3 of this division,". Stats. 1969, p. 3226, in effect November 10, 1969, operative December 1, 1969, added ", except aircraft jet fuel," to the first paragraph. Stats. 1971, p. 2785, operative July 1, 1972, substituted "gross receipts from the sale of" for "gross receipts from the distributions of" in first sentence, added "used in propelling aircraft" in first sentence, deleted "and liquefied petroleum gas the use of which is subject to the tax imposed by Part 3 of this division", and limited the collection of sales and use tax by the controller to the tax on motor vehicle fuel used in propelling an aircraft which is subject to tax and refund under Part 2 of this division. Stats. 1972, Ch. 1408, effective December 27, 1972, rearranged the wording of the first paragraph and deleted the second paragraph.

6357.1. Tax collection by Controller. [Repealed by Stats. 1989, Ch. 1027, effective September 29, 1989, but operative January 1, 1990.]

6357.1. Diesel fuel; farming business. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, diesel fuel used in farming activities and food processing. This section shall be implemented as soon as possible, but in no case later than September 1, 2001.

(b) For purposes of this section, "farming activities" has the same meaning as "farming business" as set forth in Section 263A of the Internal Revenue Code. "Farming activities" also includes the transportation and delivery of farm products to the marketplace.

(1) A tax imposed under the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or in accordance with the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)).

(2) A tax imposed under Section 6051.2 or 6201.2, or under Section 35 of Article XIII of the California Constitution.

History—Added by Stats. 2001, Ch. 156 (AB 426), in effect August 7, 2001, operative September 1, 2001.

6357.2. Tax repayment by Controller. [Repealed by Stats. 1989, Ch. 1027, effective September 29, 1989, but operative January 1, 1990.]

6357.3. Diesel fuel: exemption from rate increase. [Repealed by Stats. 2011, Ch. 6 (AB 105), effective March 24, 2011.]

6357.3. Diesel fuel: exemption from rate increase. (a) On and after July 1, 2011, there are exempted from the taxes imposed by Sections 6051.8 and 6201.8, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of both of the following:

(1) Diesel fuel purchased for use or used in a manner that is exempt from the tax imposed pursuant to Part 31 (commencing with Section 60001) of Division 2 and not subject to the backup tax imposed by Section 60058 or the payment requirement specified in Section 60108.

(2) Diesel fuel subject to the payment requirement specified in Section 60502.2.

(b) No exemption from the tax imposed pursuant to Sections 6051.8 and 6201.8 shall be allowed under this section unless the purchaser furnishes the seller with an exemption certificate, completed in accordance with any instructions or regulations as the board may prescribe.

(c) If a purchaser certifies in writing to the seller that the diesel fuel purchased without payment of the tax imposed pursuant to Section 6051.8 or 6201.8 will be used in a manner entitling the seller to regard the gross receipts or sales price from the sale as exempt from that tax, and uses the diesel fuel in a manner that subjects the diesel fuel to the tax imposed pursuant to Section 60050, the purchaser shall be liable for payment of the sales tax imposed pursuant to Section 6051.8, with applicable interest, as if the purchaser were a retailer making a retail sale of the diesel fuel at the time the fuel is so used, and the sales price of the diesel fuel to the purchaser shall be deemed the gross receipts from that retail sale.

History—Added by Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011. Former § 6357.3, similar to the present section, was added by Stats. 2010, Ch. 9 (SB 70), in effect March 23, 2010; and repealed by Stats. 2011, Ch 6 (AB 105), in effect March 24, 2011.

6357.4. Diesel fuel. (a) On and after October 1, 2022, and before October 1, 2023, there are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, diesel fuel, as defined in Section 60022.

(b) (1) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by subdivision (a) does not apply with respect to any tax levied pursuant to, or in accordance with, either of those laws.

(2) Notwithstanding subdivision (a), the exemption established by this section shall not apply with respect to any tax levied pursuant to Section 6051.2, 6051.8, 6201.2, or 6201.8, pursuant to Section 35 of Article XIII of the California Constitution, or any tax levied pursuant to Section 6051 or 6201 that is deposited in the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15.

History—Added by Stats. 2022, Ch. 55, (AB 194), in effect June 30, 2022. Repealed as of October 1, 2023, by its own provisions.

Note.—Section 17 of Ch. 55 (AB 194) of Stats. 2022 states, "(a) For purposes of complying with Section 41 of the Revenue and Taxation Code with respect to Section 6357.4 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares that the purpose of the exemption allowed by Section 6357.4 of the Revenue and Taxation Code is to provide financial relief to California businesses and residents that use diesel fuel.

(b) The performance indicators for the Legislature to use in determining whether the exemption achieves its stated goals shall be the total gallons of diesel fuel that were partially exempted from sales tax pursuant to this act, and the total dollar value of taxable diesel sales that were partially exempted from sales tax pursuant to this act.

(c) (1) The California Department of Tax and Fee Administration shall prepare a written report that includes both of the following:

(A) The estimated total number of gallons of diesel fuel that were partially exempted from sales tax pursuant to this act.

(B) The estimated total dollar value of taxable diesel sales that were partially exempted from sales tax pursuant to this act.

(2) The disclosure provisions of this subdivision shall be treated as an exception to Section 7056.5 of the Revenue and Taxation Code."

6357.5. Gasohol. [Repealed. Became inoperative June 30, 1984 pursuant to the provisions of Ch. 1321, Stats. 1983.]

6357.5. Fuel and petroleum products sold to air common carriers. (a) 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, fuel and petroleum products sold to an air common carrier for immediate consumption or shipment in the conduct of its business as an air common carrier, on an international flight.

(b) To qualify for the exemption, the air common carrier shall furnish to the seller an exemption certificate in writing stating the quantity of fuel and petroleum products claimed as exempt. 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 board. Acceptance in good faith of that certificate shall relieve the seller from liability for the sales tax.

(c) "Immediate consumption or shipment," as used in this section, means that the delivery of the fuel and petroleum products by the seller is directly into an aircraft for consumption or transportation outside the United States and not for storage by the purchaser or any third party.

(d) "International flight," as used in this section, is a flight whose final destination is a point outside of the United States.

(e) Any air common carrier claiming exemption under this section who is not required to hold a valid seller's permit, shall be required to register with the board and obtain a fuel exemption registration number, and shall be required to file returns as the board may prescribe, either if the board notifies the carrier that returns must be filed or if the carrier is liable for taxes based upon consumption or transportation of fuel or petroleum products 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).

(f) An air common carrier claiming an exemption under this section upon request, shall make available to the board records, including, but not limited to, a copy of a log abstract, an air waybill, or a cargo manifest, documenting its consumption or transportation of the fuel or petroleum products on an international flight and the amount claimed as exempt. If the carrier fails to provide these records upon request, the board may revoke the carrier's fuel exemption registration number.

(g) The board may require any air common carrier claiming an exemption under this section and required to obtain a fuel exemption registration number, to place with it such security as the board may determine pursuant to Section 6701.

(h) Pursuant to this section, any use of the fuel and petroleum products by the purchasing carrier, other than that incident to the delivery of the fuel and petroleum products to the carrier and the consumption or transportation of the fuel and petroleum products by the carrier on an international flight for use in the conduct of its business as a common carrier, or a failure of the carrier to document its consumption or transportation of the fuel and petroleum products on an international flight, 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.

(i) In the event that the federal exemption provided in Section 1309 of Title 19 of the United States Code, relating to supplies for certain vessels and aircraft, is repealed, this section is repealed as of that date.

History—Added by Stats. 1988, Ch. 1227, in effect September 23, 1988. Stats. 1991, Ch. 1091, in effect January 1, 1991, substituted "January 1, 1994" for "that date" after "which is chaptered before" in the first sentence and added "However," to the second sentence. Stats. 1992, Ch. 905, in effect September 25, 1992, operative January 1, 1993, substituted "an international flight" for "a flight whose first destination is a foreign destination" in subdivision (a); deleted former subdivision (c) which defined "Foreign destination"; relettered former subdivision (d) as subdivision (c); added subdivision (d); substituted "on an international flight" for "to a foreign destination" in subdivision (f) and for "to the foreign destination" twice in subdivision (h); deleted the former first and second sentences which provided operative and repeal dates, substituted "In" for "However, in" before "the event", deleted "prior to January 1, 1994" after "is repealed", deleted "also" after "this section is", and substituted "that" for "the", in subdivision (i).

6357.7. Motor vehicle fuel. [Repealed by Stats. 2011, Ch. 6 (AB 105), effective March 24, 2011.]

6357.7. Motor vehicle fuel. (a) On and after July 1, 2010, there are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, motor vehicle fuel, as defined in Section 7326.

(b) (1) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section shall not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.

(2) The exemption established by this section shall not apply with respect to any tax levied pursuant to Section 6051.2, 6051.5, 6201.2, or 6201.5, or pursuant to Section 35 of Article XIII of the California Constitution.

(c) On and after July 1, 2010, the State Board of Equalization and the Department of Finance shall recognize that the state no longer receives state sales and use tax revenues from the sale of, and the storage, use, or other consumption of, motor vehicle fuel for purposes of any estimates required to be performed under paragraphs (1) and (2) of subdivision (a) of Section 7102, and Section 7104.2.

History—Added by Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011. Former § 6357.7, similar to the present section, was added by Stats. 2010, Ch. 11, Eighth Extraordinary Session (ABx8 6), in effect March 22, 2010; and repealed by Stats. 2011, Ch 6 (AB 105), in effect March 24, 2011.

6358. Animal life; feed; seeds; plants; fertilizer. There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of:

(a) Any form of animal life the products of which ordinarily constitute food for human consumption.

(b) Feed for any form of animal life the products of which ordinarily constitute food for human consumption or are to be sold in the regular course of business.

(c) Seeds and plants the products of which ordinarily constitute food for human consumption or are to be sold in the regular course of business.

(d) Fertilizer to be applied to land the products of which are to be used as food for human consumption or are to be sold in the regular course of business.

(e) On or after January 1, 1997, drugs or medicines, including oxygen, the primary purpose of which is the prevention or control of disease, that are administered to animal life the products of which ordinarily constitute food for human consumption.

History—Stats. 1943, p. 2456, operative July 1, 1943, added (b), (c), and (d). Stats. 1947, p. 2028, operative July 1, 1947, substituted "Any form of animal life" for "Livestock and poultry" in (a) and (b). Stats. 1996, Ch. 954, in effect September 26, 1996, but operative January 1, 1997, substituted "the sale in this state of," for "sales of" after "receipts from", and added "in this state" after "consumption" in the first paragraph, and added subdivision (e). Stats. 1998, Ch. 323, in effect August 20, 1998, but operative January 1, 1999, deleted "annual" after "seeds and" in subdivision (c), and added "are to be" after "consumption or" in subdivision (d). Stats. 1999, Ch. 289, (SB 963), in effect September 1, 1999, but operative January 1, 2000, deleted "of a kind" after "animal life" in subdivisions (a), (b) and (e), and added "including oxygen" after "medicines" in subdivision (e).

6358.1. Fuel; organic products and waste byproducts. (a) There are exempted from taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this state of either of the following:

(1) Organic products grown expressly for fuel purposes.

(2) Waste byproducts from agricultural or forest products operations, municipal refuse, or manufacturing, which are used in an industrial facility as a fuel source in lieu of the use of either oil, natural gas or coal.

(b) In addition to subdivision (a), the exemption under this section shall include the use of still gas produced in the refining process from purchased crude oil.

History—Added by Stats. 1980, Ch. 1248, operative January 1, 1981 until December 31, 1986 and as of such date is repealed, unless a later enacted statute, chaptered before December 31, 1986, deletes or extends such date. Stats. 1983, Ch. 1059, in effect January 1, 1984, deleted "delivered in bulk and are" after "which are" in subdivision (b) and added subdivision (c). Stats. 1986, Ch. 254, effective July 3, 1986, deleted the expiration date of the exemption.

Note.—Section 2 of Stats. 1983, Ch. 1059, provided, "Section 1 of this act, which amends Section 6358.1 of the Revenue and Taxation Code, does not constitute a change in, but is declaratory of, the existing law. It is the intent of the Legislature in enacting this act to clarify existing law.

Petroleum coke is waste by product.—The court agreed with the taxpayer that fuel-grade petroleum coke was tax exempt as a waste by product despite the fact that the coke was sold for use as fuel in a chemical manufacturing facility. The coke was a solid by product of taxpayer's crude oil refinery. Union Oil v. State Board of Equalization (1990) 224 Cal.App.3d 665.

6358.2. Poultry litter. There are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this state of wood shavings, sawdust, rice hulls, or other products that are used as litter in poultry and egg production and that are ultimately resold as, or incorporated into fertilizer products.

History—Added by Stats. 1993, Ch. 568, in effect September 28, 1993, but operative January 1, 1994. Stats. 1994, Ch. 146, in effect January 1, 1995, added "as," after "resold".

6358.4. Medicated feed and drinking water. There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, drugs or medicines administered to animal life as an additive to feed or drinking water, the primary purpose of which is the prevention and control of disease of food animals, or of nonfood animals which are to be sold in the regular course of business.

History—Added by Stats. 1995, Ch. 620, in effect October 5, 1995, operative April 1, 1996.

6358.5. Racehorse breeding stock. (a) (1) There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, any racehorse breeding stock.

(2) For purposes of this section "racehorse breeding stock" means a horse that is capable of reproduction and for which the purchaser states that it is the purchaser's sole intent to use the horse for breeding purposes.

(b) (1) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.

(2) The exemption established by this section does not apply with respect to any tax levied pursuant to either Section 6051.2 or 6201.2, or pursuant to Section 35 of Article XIII of the California Constitution.

6359. Food products. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption.

(b) For the purposes of this section, "food products" includes all of the following:

(1) Cereals and cereal products, oleomargarine, meat and meat products, fish and fish products, eggs and egg products, vegetables and vegetable products, fruit and fruit products, spices and salt, sugar and sugar products, candy, gum, confectionery, coffee and coffee substitutes, tea, and cocoa and cocoa products.

(2) Milk and milk products, milkshakes, malted milks, and any other similar type beverages which are composed at least in part of milk or a milk product and that require the use of milk or a milk product in their preparation.

(3) All fruit juices, vegetable juices, and other beverages, whether liquid or frozen, including bottled water, but excluding spirituous, malt, or vinous liquors or carbonated beverages.

(1) Medicines, including medicinal cannabis or medicinal cannabis products, as defined in Division 10 (commencing with Section 26000) of the Business and Professions Code, and preparations in liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as dietary supplements or adjuncts.

(2) Cannabis, as defined in Section 11018 of the Health and Safety Code, and cannabis products, as defined in Section 11018.1 of the Health and Safety Code.

(3) This addition of this subdivision does not constitute a change in, but is declaratory of, existing law.

(d) None of the exemptions in this section apply to any of the following:

(1) When the food products are served as meals on or off the premises of the retailer.

(2) When the food products are furnished, prepared, or served for consumption at tables, chairs, or counters or from trays, glasses, dishes, or other tableware whether provided by the retailer or by a person with whom the retailer contracts to furnish, prepare, or serve food products to others.

(3) When the food products are ordinarily sold for immediate consumption on or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the location, even though those products are sold on a "take out" or "to go" order and are actually packaged or wrapped and taken from the premises of the retailer.

(4) When the food products are sold for consumption within a place, the entrance to which is subject to an admission charge, except for national and state parks and monuments, marinas, campgrounds, and recreational vehicle parks.

(5) When the food products are sold through a vending machine.

(6) When the food products sold are furnished in a form suitable for consumption on the seller's premises, and both of the following apply:

(A) Over 80 percent of the seller's gross receipts are from the sale of food products.

(B) Over 80 percent of the seller's retail sales of food products are sales subject to tax pursuant to paragraph (1), (2), (3), or (7).

(7) When the food products are sold as hot prepared food products.

(e) "Hot prepared food products," for the purposes of paragraph (7) of subdivision (d), include a combination of hot and cold food items or components where a single price has been established for the combination and the food products are sold in combination, such as a hot meal, a hot specialty dish or serving, a hot sandwich, or a hot pizza, including any cold components or side items. Paragraph (7) of subdivision (d) does not apply to a sale for a separate price of bakery goods or beverages (other than bouillon, consommé, or soup), or where the food product is purchased cold or frozen; "hot prepared food products" means those products, items, or components that have been prepared for sale in a heated condition and that are sold at any temperature that is higher than the air temperature of the room or place where they are sold.

(f) Notwithstanding paragraph (6) of subdivision (d), if the seller elects to separately account for sales of food products specified in subdivision (b), then the gross receipts from the sale of those food products shall be exempt under subdivision (a), provided that the separate accounting is fully documented in the seller's records. However, if the seller's records do not reflect the separate accounting of the gross receipts from sales of nontaxable food products, the seller's election under this subdivision shall be revoked.

History—Stats. 1953, p. 1629, in effect September 9, 1953, added the former last paragraph. Stats. 1963, p. 4046, in effect September 20, 1963, deleted "milk and milk products" from first paragraph and completely revised the former next to last paragraph, making it the last paragraph; and the former last paragraph was made the third paragraph, with the words "milk and milk products" added and "which are purchased for consumption off the premises of the retailer" deleted. Stats. 1965, p. 2427, in effect September 17, 1965, added in the last paragraph "whether" and "or by a person with whom the retailer contracts to furnish, prepare, or serve food products to others." Stats. 1969, p. 3127, in effect January 1, 1970, revised the fourth paragraph and added the fifth paragraph, and added (d) to the sixth paragraph. Stats. 1970, p. 1057, in effect November 23, 1970, rearranged wording of fourth paragraph. Stats. 1971, p. 3711, in effect December 14, 1971, operative January 1, 1972, deleted "other than candy and confectionery" from and added "non-medicated chewing gum", to second paragraph, and added (e). Stats. 1983, Ch. 323, in effect July 21, 1983, operative August 1, 1983, added a new subdivision "(e)" in the sixth paragraph, changed previous subdivision "(e)" to "(f)", and changed all references to previous subdivision "(e)" to "(f)". Stats. 1984, Ch. 930, effective January 1, 1985, changed subdivision letter and number designations, added all text in paragraph (6) of subdivision (d). Stats. 1985, Ch. 1197, by Section 1 of chapter, effective January 1, 1986, added "marinas, campgrounds, and recreational vehicle parks" in subdivision (d)(4), and substituted "paragraph" for "paragraphs" in subdivision (d)(5)(B). Stats. 1991, Ch. 85, in effect June 30, 1991, operative July 1, 1991, in subparagraph (b)(1) added "other than candy or confectionery" after "sugar and sugar products" and after "cocoa and cocoa products", deleted "and nonmedicated chewing gum" after "cocoa and cocoa products", added "any of the following:" after "do not include", "(1)" before "Medicines", and paragraph (2), in subdivision (c) and added subdivision (f). Stats 1991, Ch. 88, in effect June 30, 1991, operative July 15, 1991, substituted "July 15" for "July 1" in subdivision (f). Prop. 163, Sec. 2, in effect December 1, 1992, deleted "other than" after "sugar and sugar products,", added ", gum," after "candy", deleted "or" before "confectionery", added "and" after "tea,", and deleted ", other than candy or confectionery" after "cocoa products" in subdivision (b)(1); substituted "including" for "except" after "liquid or frozen," and added "but excluding" after "bottled water," in subdivision (b)(3); substituted "do not include medicines" for "do not include any of the following: (1) Medicines"; deleted former subdivision (c)(2) which defined snack foods; inserted a comma after "items" in the second sentence of subdivision (e); and deleted former subdivision (f) which stated that "The amendments to this section by the act adding this subdivision shall become operative on July 15, 1991.". Stats. 1995, Ch. 647, in effect October 6, 1995, operative April 1, 1996, added commas after "sale of" and "state of" in subdivision (a); substituted "that" for "which" after "product and" in paragraph (2) and added a comma after "malt" in paragraph (3) of subdivision (b); deleted "such" after "are sold in", deleted "or" after "serving," and added a comma after "sandwich" in the first sentence and substituted "that" for "which" throughout the second sentence of subdivision (e); and added subdivision (f). Stats. 1996, Ch. 124, in effect January 1, 1997, deleted "provided for" after "exemptions" in subdivision (d); substituted "those" for "such" after "even though" in paragraph (3) of subdivision (d); and substituted "does" for "shall" after "subdivision (d)" in the first sentence of subdivision (e). Amended by Stats. 824, Ch. 432, in effect January 1, 2022, replaced "include" with "includes" in subdivision (b); replaced "do" with "does" and "medicines" with "any of the following:," renumbered the first paragraph to "(1)" and added "Medicines, including medicinal cannabis or medicinal cannabis products, as defined in Division 10 (commencing with Section 26000) of the Business and Professions Code," before "and preparations in liquids," and added paragraphs (2) and (3) in subdivision (c).

Sandwiches as "meals"; "paper napkins" as facilities.—The sale of hot dog and hamburger sandwiches, even when served with beverages, from sandwich stands or booths where neither chairs nor tables are provided for customers, does not constitute a "meal" within this section. A "paper napkin" is not "tableware" within this section, since the rule of ejusdem generis is applicable. Treasure Island Catering Co., Inc. v. State Board of Equalization (1941) 19 Cal.2d 181.

Skinless sausage casings.—Cellulose sausage casings used in manufacture of skinless wieners but removed and destroyed prior to sale are not food or food products nor do they become an integral part of food products within the meaning of this section. Luer Packing Co. v. State Board of Equalization (1950) 101 Cal.App.2d 99.

Cardboard trays.—The trial court was sustained in its finding that the serving of sandwiches and beverages on nonreturnable cardboard trays constitutes serving meals and furnishing food for consumption from trays. Hart's Drive-In Corp. v. State Board of Equalization (1956) 145 Cal.App.2d 657.

Glacéd Fruits.—Glacéd fruits were properly classified as "candy or confectionery" under this section as operative prior to January 1, 1972. Mission Pak Co. v. State Board of Equalization (1972) 23 Cal.App.3d 120.

Revenue and Taxation Code Section 6359(c) Held Constitutional.—Certain restaurant owners, operators of drive-ins providing carhop services, sought to recover sales and use taxes paid by them on sales of "take out" orders. Such orders are taxable under subparagraph (c) of Section 6359 of the Revenue and Taxation Code when the food is purchased at a drive-in type of operation, whether it is consumed on the premises or not, although "take out" orders at conventional restaurants are exempt. The drive-in operators argued that subparagraph (c), and the Board's administration thereof, was unconstitutionally vague, and arbitrarily discriminated between drive-ins and conventional restaurants. The court, in holding the provision constitutional, found that the distinctions made in the statute had a rational basis in the Legislature's desire to equalize competition and tax burdens between conventional restaurants and newly evolving forms of eating establishments where food was consumed in a similar manner, whether inside one's own car or inside a restaurant. The court also found that the statute prescribed a standard sufficiently definite to be understandable to the average person desiring to comply therewith. Henry's Restaurants of Pomona, Inc. v. State Board of Equalization (1973) 30 Cal.App.3d 1009, hearing in Sup. Ct. den. May 16, 1973.

Subsidies to Cafeteria Operators.—Subsidies paid by employers to operators of employee cafeterias are not includable within the operators' gross receipts and not subject to tax. Szabo Food Service, Inc. of California v. State Board of Equalization (1975) 46 Cal.App.3d 268.

6359.1. Hot prepared food products sold to air carriers. There are exempted from the taxes imposed by this part, the gross receipts from the sale of, and storage, use, or other consumption in this state, of hot prepared food products sold by caterers, or other vendors, to air carriers engaged in interstate or foreign commerce for consumption by passengers on such air carriers, and the gross receipts from the sale of and the storage, use or other consumption of hot prepared food products sold or served to passengers by air carriers engaged in interstate or foreign commerce for consumption by passengers on such air carriers.

History—Added by Stats. 1974, Ch. 156, effective April 4, 1974.

6359.2. Food products sold through vending machines. [Repealed by Stats. 1983, Ch. 323, in effect July 21, 1983, operative August 1, 1983.]

6359.2. Food products sold through vending machines. (a) Except as otherwise provided in Sections 6359.4, 6359.45, 6363, and 6370, for the year beginning on January 1, 1988, and ending on December 31, 1988, 77 percent of the gross receipts of any retailer from the sale at retail of food products shall be subject to the tax imposed by Section 6051, when those food products are actually sold through a vending machine.

(b) Except as otherwise provided in Sections 6359.4, 6359.45, 6363, and 6370, for the year beginning on January 1, 1989, and ending on December 31, 1989, 55 percent of the gross receipts of any retailer from the sale at retail of food products shall be subject to the tax imposed by Section 6051, when those food products are actually sold through a vending machine.

(c) Except as otherwise provided in Sections 6359.4, 6359.45, 6363, and 6370, for the year beginning on January 1, 1990, and thereafter, 33 percent of the gross receipts of any retailer from the sale at retail of food products shall be subject to the tax imposed by Section 6051, when those food products are actually sold through a vending machine.

(d) The Legislature finds that 33 percent represents the statewide average of food products sold through vending machines which are subject to the tax imposed under this part. Therefore, the Legislature establishes this average as the measure of the tax with respect to vending machine sales to simplify tax auditing procedures and to provide for uniformity in the taxation of gross receipts derived from the sale of food products through vending machines.

The Legislature also finds that due to fiscal constraints, it is necessary to phase in the partial exemption for sales made through vending machines in the 1988 and 1989 calendar years.

(e) For purposes of this section, "food products" includes hot coffee, hot tea, and hot chocolate, when those hot beverages are actually sold through a vending machine for a separate price. "Food products" does not include other hot prepared food products, as defined in Section 6359.

History—Added by Stats. 1987, Ch. 1300, in effect September 28, 1987, operative January 1, 1988. Stats. 1988, Ch. 1029, in effect January 1, 1989, deleted "(other than hot prepared food products, as defined in Section 6359)" following "sale at retail of food products" in subdivisions (a), (b) and (c); deleted "cold" following "average of" in subdivision (d); and added subdivision (e).

6359.3. Nonprofit veterans' organization not retailer of flags. Any nonprofit veterans' organization is a consumer of, and shall not be considered a retailer within the provisions of this part with respect to flags of the United States of America which it sells, where the profits are used solely and exclusively in furtherance of the purposes of the nonprofit organization.

History—Added by Stats. 1961, p. 1157, in effect September 15, 1961. Stats. 1963, p. 2790, in effect September 20, 1963, completely revised this section. Stats. 1964, p. 193 (First Extra Session), in effect May 8, 1964, again revised this section. Stats. 1970, p. 2012, operative October 1, 1970, added paragraph (c). Stats. 1971, p. 3712, in effect December 14, 1971, operative January 1, 1972, deleted all reference to other nonprofit organizations as consumers of candy or other confectionery.

6359.4. Vending machine operator. [Repealed by Stats. 1983, Ch. 323, in effect July 21, 1983, operative August 1, 1983.]

6359.4. Vending machine operator. (a) Any vending machine operator is a consumer of, and shall not be considered a retailer of, food products which sell at retail for fifteen cents ($0.15) or less and which are actually sold through a vending machine.

(b) Notwithstanding subdivision (a), any vending machine operator is a consumer of, and shall not be considered a retailer of, food products, other than beverages or hot prepared food products, which are sold through a coin-operated bulk vending machine if the amount of each sale is twenty-five cents ($0.25) or less. For purposes of this subdivision, "bulk vending machine" means a vending machine containing unsorted food products, other than beverages or hot prepared food products which, upon insertion of a coin, dispenses those food products, including candy and confectionery, in approximately equal portions, at random, and without selection by the customer.

History—Added by Stats. 1985, Ch. 1424, effective January 1, 1986. Stats. 1987, Ch. 1300, in effect September 28, 1987, operative January 1, 1988, added "(a)" before first paragraph and added paragraph (b). Stats. 1991, Ch. 236, in effect July 29, 1991, added ", including candy and confectionery," after "food products" in subdivision (a), added "including candy and confectionery" after "food products" in the first sentence and after "food products" in the second sentence of subdivision (a). Stats. 1993, Ch. 257, in effect January 1, 1994, deleted "including candy and confectionery" following "food products" in Subdivision (a) and in the first two references to food products in subdivision (b), and added commas preceding and following "including candy and confectionery" in the third reference in (b).

Paper cups in vending machines.—Although under Section 6359.4, plaintiff was a consumer of tangible property sold through its vending machines, plaintiff's paper cups containing beverages dispensed through its vending machines were nevertheless exempt nonreturnable containers under Section 6364(a). Canteen Corp. v. State Board of Equalization (1985) 174 Cal.App.3d 952.

6359.45. Nonprofit, charitable, or education organization vending machine operator; photocopy machine in library. (a) Any vending machine operator which is a nonprofit, charitable, or educational organization is a consumer of, and shall not be considered a retailer of, tangible personal property which sells at retail for fifteen cents ($0.15) or less and which is actually sold through a vending machine.

(b) any library district, municipal library, or county library and any vendor making sales pursuant to a contract with a library district, municipal library, or county library is a consumer of, and shall not be considered a retailer of, photocopies which it sells at retail and which are actually sold through a coin-operated copy machine located at a library facility.

History—Added by Stats. 1983, Ch. 323, in effect July 21, 1983. Stats. 1984, Ch. 1468, effective January 1, 1985, added (a) and (b) designations, added all text of (b).

6359.5. Candy, confectionery, and snack foods; nonprofit youth organizations. [Repealed by Stats. 1993, Ch. 257, effective January 1, 1994.]

6359.7. Ice or dry ice. As incidental to the exemption provided for in Section 6359, there are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption in this state of ice or dry ice used or employed in packing and shipping or transporting food products for human consumption when the food products are shipped or transported in intrastate, interstate, or foreign commerce by common carriers, contract carriers, or proprietary carriers.

History—Added by Stats. 1985, Ch. 1045, effective September 27, 1985, operative January 1, 1986.

6359.8. Carbon dioxide. When fruits or vegetables are shipped or transported in intrastate, interstate, or foreign commerce by common carriers, contract carriers, or proprietary carriers, as an incident to the exemption provided for in Section 6359, there are exempted from the taxes imposed by this part, the gross receipts from the sale of, and the storage, use, or other consumption in this state of, all of the following:

(a) Carbon dioxide used or employed in packing and shipping or transporting fruits or vegetables for human consumption, when those fruits or vegetables are not sold to the ultimate consumer in a package that contains the carbon dioxide.

(b) Any nonreturnable materials containing the carbon dioxide atmosphere.

History—Added by Stats. 1994, Ch. 624, in effect September 19, 1994, but operative January 1, 1995.

6360. Bracelets commemorating American prisoners of war. Any organization formed and operated for charitable purposes and qualifying for the welfare exemption from property taxation under Section 214 is a consumer of, and shall not be considered a retailer within the provisions of this part with respect to bracelets designed to commemorate American prisoners of war, which it distributes, whether or not a contribution is made to such organization, where the profits are used solely and exclusively in furtherance of the purposes of such organization.

History—Added by Stats. 1972, Ch. 1176, operative April 1, 1973.

6360.1. "Buddy Poppy." There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, a "Buddy Poppy" or any other symbolic, impermanent lapel pin that memorializes United States military veterans killed in foreign wars of the United States, by any corporation established by the Congress of the United States pursuant to Chapter 2301 (commencing with Section 23101) of Title 36 of the United States Code, or any of that corporation's subordinate state or territorial subdivisions, local chapters, posts, or auxiliaries.

History—Added by Stats. 1995, Ch. 316, in effect August 3, 1995. Stats. 2006, Ch. 364 (AB 3076), in effect January 1, 2007, substituted "2301 (commencing with Section 23101" for "7A (commencing with Section 111" after "pursuant to Chapter."

Note.—Stats. 1995, Ch. 316, expressed the Legislature's findings and declarations stating that the sale or use of Buddy Poppies is worthy of an exemption from sales and use taxation in recognition of the work done by the Veterans of Foreign Wars and others on behalf of disabled veterans. The Legislature also finds and declares that the "Buddy Poppy" program is one of the most successful and widely known fundraisers for disabled veterans. During 1993–94, 8,000,000 of the handcrafted flowers were sold, raising $1.6 million for veterans' rehabilitation, and children and youth programs nationwide.

6361. Nonprofit youth organization. (a) Any organization listed or described in subdivision (b) is a consumer and shall not be considered a retailer within the provisions of this part, of food products, nonalcoholic beverages, or other tangible personal property made or produced by members of the organization provided, however, that the organization's sales are made on an irregular or intermittent basis, and that the organization's profits from those sales are used exclusively in furtherance of the purposes of the organization.

(b) For purposes of this section, "organization" includes any of the following:

(1) Any nonprofit organization which meets all of the following conditions:

(A) The organization qualifies for tax-exempt status under Section 501(c) of the Internal Revenue Code.

(B) The organization's primary purpose is to provide a supervised program of competitive sports for youth, or to promote good citizenship in youth.

(2) (A) Any youth group sponsored by or affiliated with a qualified educational institution, including, but not limited to, any student activity club, athletic group, or musical group.

(B) For purposes of this section, "qualified educational institution" means any of the following:

(i) Any public elementary, secondary or vocational-technical school providing education for kindergarten, grades 1 to 12, inclusive, and college undergraduate programs, or any part thereof, operated by state or local government.

(ii) Any nonprofit private educational institution providing education for kindergarten, grades 1 to 12, inclusive, and college undergraduate programs, or any part thereof, that meets the requirements of the State Department of Education for a school. "Private educational institution" means any entity providing education which satisfies the requirements of state and local laws pertaining to private educational institutions in effect on January 1, 1990, and which does not discriminate on the basis of race, sex, nationality, or religion.

(3) Little League, Bobby Sox, Boy Scouts, Cub Scouts, Girl Scouts, Campfire Inc., Young Men's Christian Association, Young Women's Christian Association, Future Farmers of America, Future Homemakers of America, 4-H Clubs, Distributive Education Clubs of America, Future Business Leaders of America, Vocational Industrial Clubs of America, Collegiate Young Farmers, Boys' Clubs, Girls' Clubs, Special Olympics, Inc., American Youth Soccer Organization, California Youth Soccer Association, North, California Youth Soccer Association, South, and Pop Warner football.

(c) For purposes of this section, "irregular or intermittent," means associated directly with a particular event, such as fairs, galas, parades, scout-a-ramas, games, and similar activities. That term includes refreshment stands or booths that are utilized at scheduled events of organized leagues, but does not include storefront or mobile retail outlets which ordinarily require local business licenses.

History—Added by Stats. 1974, Ch. 1421, operative January 1, 1975. Stats. 1985, Ch. 1153, effective January 1, 1986, added "youth group … in youth", deleted "whose primary … trustworthy adults", added "which qualifies … Revenue Code," deleted "and" before "nonalcoholic beverages", deleted "which it sells" and added "or other … intermittent basis" after "nonalcoholic beverages," and substituted "those" for "such" in the first paragraph, added second and third paragraphs, substituted "does" for "shall", and deleted "be construed to" before "include" in the last paragraph. Stats. 1986, Ch. 967 effective January 1, 1987, added the "Distributive Education Clubs of America, Future Business Leaders of America, Vocational Industrial Clubs of America, Collegiate Young Farmers, Boys' Clubs, and Girls' Clubs". Stats. 1988, Ch. 710, in effect August 29, 1988, operative January 1, 1989, added "Special Olympics, Inc., American Youth Soccer Organization, California Youth Soccer Association, North, California Youth Soccer Association, South, and Pop Warner Football." Stats. 1989, Ch. 654, in effect January 1, 1990, added subdivision letters (a), (b), (c) and (d), and substituted "501(c)" for "170(c)" in subdivision (a). Stats. 1990, Ch. 116, in effect June 1, 1990, deleted "nonprofit" after "(a) Any", deleted "youth group sponsored by a school district, or other organization the primary purpose of which is to provide a supervised program of competitive sports for youth, or to promote good citizenship in youth, which does not discriminate on the basis of race, sex, nationality, or religion, and which qualifies for tax-exempt status under Section 501(c) of the Internal Revenue Code," after "Any organization", added "listed or described in subdivision (b)" before "is a", deleted "of" after "consumer", deleted "with respect to" after "part", added "of" before "food", deleted "which it sells" after "the organization", added "provided, however, that the organization's sales are made" before "on an irregular", substituted "and" for "provided", added "organization's" before "profits", added "from those sales" after "profits", deleted "solely and" before "exclusively", substituted "the" for "those" after "furtherance of", added "of the organization" after "purposes" in subdivision (a); added subdivision (b); relettered former subdivision (b) as subdivision (c); renumbered former subdivision (c) as paragraph (3) of subdivision (b); deleted "The organizations described in this section include only" before "Little League", substituted "football" for "Football" in paragraph (3) of subdivision (b); added "For purposes of this section,", substituted "irregular" for "Irregular", deleted "as used in this section" before "means"; substituted "That term includes" for "Included are" added "does" after "leagues, but", substituted "That term includes" for "included are", deleted ", or activities by any group that does not qualify for tax-exempt status under Section 501(c) of the Internal Revenue Code." after "licenses"; and deleted former subdivision (d) which stated, " 'Nonprofit organization', as used in this section, does not include the state or any of its political subdivisions".

6361.1. Nonprofit youth organization. [Repealed by Stats. 1990, Ch. 116, in effect June 1, 1990.]

6361.1. Handcrafted items. (a) Any qualified organization is a consumer of, and shall not be considered a retailer of, tangible personal property if all of the following conditions are met:

(1) The tangible personal property is of a handcrafted or artistic nature and is designed, created, or made by either individuals with developmental disabilities or children with severe emotional disturbances who are members of, or receive services from, the qualified organization.

(2) The price of each item of tangible personal property sold does not exceed twenty dollars ($20).

(3) The qualified organizations's sales are made on an irregular or intermittent basis.

(4) The qualified organizations's profits from the sales are used exclusively in furtherance of the purposes of the organization.

(b) For purposes of this section, "qualified organization" means any organization that meets all of the following conditions:

(1) The organization is exempt from taxation pursuant to paragraph (3) of subsection (c) of Section 501 of Title 26 of the United States Code.

(2) The primary purpose of the organization is to provide services to either individuals with developmental disabilities or children with severe emotional disturbances.

(3) The organization does not discriminate on the basis of race, sex, nationality, or religion.

History—Added by Stats. 1993, Ch. 653, in effect October 1, 1993, but operative January 1, 1994. Stats. 1995, Ch. 290, in effect August 3, 1995, added "or artistic" after "handcrafted", added "either" after "made by" and added "or children … disturbances" after "disabilities" in paragraph (1) and substituted "twenty dollars ($20)" for "ten dollars ($10)" in paragraph (2) of subdivision (a); added "either" after "services to" and added "or children … disturbances" after "disabilities" in paragraph (2) of subdivision (b). Stats. 2004, Ch. 183 (AB 3082), in effect January 1, 2005, substituted "organization's" for "organizations's" after "The qualified" in paragraphs (3) and (4) of subdivision (a), and substituted "paragraph (3) … United States" for "Section 501(c)(3) of the Internal Revenue" after "pursuant to" in paragraph (1) of subdivision (b).

6361.5. School yearbooks and catalogs. Any public or private school, school district, county office of education, or student organization is a consumer of, and shall not be considered a retailer within the provisions of this part with respect to yearbooks and catalogs prepared for or by it and distributed to students.

History—Added by Stats. 1977, Ch. 921, operative January 1, 1978. Stats. 1988, Ch. 205, in effect June 23, 1988, operative October 1, 1988, added "county office of education."

6362.5. Master tapes or master records. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale or lease of, and the storage, use, or other consumption in this state of, master tapes or master records embodying sound, except amounts subject to the taxes imposed by other provisions of this part paid by a customer in connection with the customer's production of master tapes or master records to a recording studio for the tangible elements of such master records or master tapes.

(b) For purposes of this section:

(1) "Master tapes or master records embodying sound" means tapes, records, and other devices utilized by the recording industry in making recordings embodying sound.

(2) "Amounts paid for the furnishing of the tangible elements" shall not include any amounts paid for the copyrightable, artistic or intangible elements of such master tapes or master records, whether designated as royalties or otherwise including, but not limited to, services rendered in producing, fabricating, processing, or imprinting tangible personal property or any other services or production expenses in connection therewith which may otherwise be construed as constituting "sale" under Section 6006.

(3) "Recording studio" is a place where, by means of mechanical or electronic devices, voices, music, or other sounds are transmitted to tapes, records, or other devices capable of reproducing sound.

History—Added by Stats. 1975, Ch. 1116, operative January 1, 1976. Stats. 1982, Ch. 951, in effect January 1, 1983, added the balance of subsection (2) of subdivision (b) after "otherwise."

Master sound tapes.—1982 amendment did not make 1975 enactment of section 6362.5 retroactive to years prior to enactment. Taxpayers' agreements with independent producers for master tapes were sales agreements, not employment contracts. Master tapes were physically useful in manufacturing process. Sales of master tapes may constitutionally be taxed differently than leases of movies. Capitol Records, Inc. v. State Board of Equalization (1984) 158 Cal.App.3d 582.

Master tapes are tangible personal property.—The true object of contracts between a record company and various artist companies was the production and acquisition of master tapes not the procurement of recording services. A and M Records, Inc. v. State Board of Equalization (1988) 204 Cal.App.3d 358.

6362.7. Newspapers and periodicals distributed without charge. [Repealed by Stats. 1992, Ch. 903, in effect September 25, 1992, operative November 1, 1992.]

6362.7. Newspapers and periodicals distributed without charge; periodicals. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale of, and the storage, use, or other consumption in this state, of tangible personal property which becomes an ingredient or component part of any newspaper or periodical that is distributed without charge and regularly issued at average intervals not exceeding three months, and any such newspaper or periodical.

(b) There are exempted from the taxes imposed by this part, the gross receipts from the sale of, and the storage, use, or other consumption in this state, of tangible personal property which becomes an ingredient or a component part of any periodical regularly issued at average intervals not exceeding three months, and any such periodical, that is sold by subscription and delivered by mail or common carrier.

(c) For purposes of this section, "periodical" means any publication that appears at stated intervals at least four times per year, but not more than 60 times per year, each issue of which contains news or information of general interest to the public, or to some particular organization or group of persons. Each issue must bear a relationship to prior or subsequent issues with respect to continuity of literary character or similarity of subject matter, and there must be some connection between the different issues of the series in the nature of the articles appearing in them. Each issue must be sufficiently similar in style and format to make it evident that it is one of a series. The term does not include printed sales messages, shopping guides, or other publications of which the advertising portion, including product publicity, exceeds 90 percent of the printed area of the entire issue in more than one-half of the issues during any 12-month period.

History—Added by Stats. 1992, Ch. 903, in effect September 25, 1992, operative November 1, 1992.

Classification of advertising publications as taxable.—Differential tax treatment of advertising publications was not content based discrimination that is prohibited by the first amendment. The presence of advertising as a basis for distinction is a constitutionally reasonable basis. Redwood Publishing Co. v. State Board of Equalization (1989) 207 Cal.App.3d 734.

6362.8. Newspaper and periodicals distributed by nonprofit organizations. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale of, and the storage, use, or other consumption in this state, of tangible personal property that becomes an ingredient or component part of any newspaper or periodical regularly issued at average intervals not exceeding three months, or any such newspaper or periodical.

(b) This section shall apply only with respect to any of the following:

(1) Any newspaper or periodical that is published or purchased by an organization that qualifies for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code and is distributed to the members of the organization in consideration of payment of the organization's membership fee, or to the organization's contributors.

(2) Any newspaper or periodical that is published by an organization that qualifies for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code and does not receive revenue from, or accept, any commercial advertising.

(3) Any newspaper or periodical distributed by a nonprofit organization for which both of the following apply:

(A) Distribution is to any member of the nonprofit organization in consideration, in whole or in part, of payment of the organization's membership fee.

(B) The amount paid or incurred by the nonprofit organization for the cost of printing the newspaper or periodical is less than 10 percent of the membership fee attributable to the period for which the newspaper or periodical is distributed.

History—Added by Stats. 1991, Ch. 461, in effect October 1, 1991, operative November 1, 1991. Stats. 1992, Ch. 903, in effect September 25, 1992, operative November 1, 1992, added "regularly issued at … months" after "periodical" in subdivision (a); substituted "and is distributed" for ", and to which any of the following apply: (A) Distribution" in paragraph (1) of subdivision (a), substituted "(2) Any … Code and" for "(B) The publication" in paragraph (2) of subdivision (b), and renumbered former paragraph (2) of subdivision (a) as paragraph (3).

6363. Meals. There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, meals and food products for human consumption furnished or served to the students of a school by public or private schools, school districts, student organizations, parent-teacher associations, and any blind person (as defined in Section 19153 of the Welfare and Institutions Code) operating a restaurant or vending stand in an educational institution under Article 5 (commencing with Section 19625) of Chapter 6 of Part 2 of Division 10 of the Welfare and Institutions Code. The term "food products" as used in this section has the meaning ascribed to it in Section 6359.

The exemption provided by this section shall not apply when the meals or food products are sold for consumption within a place, the entrance to which is subject to an admission charge, except for national and state parks and monuments.

History—Added by Stats. 1943, p. 2456, operative July 1, 1943. Stats. 1947, p. 2029, operative July 1, 1947, added provisions respecting food products. Stats. 1955, p. 2104, in effect September 7, 1955, added provisions respecting blind persons, and rearranged wording. Stats. 1963, p. 3763, in effect September 20, 1963, deleted the provisions relating to "employers or employee organizations." Stats. 1965, p. 3131 in effect September 17, 1965, deleted "or teachers." Stats. 1970, p. 1059, in effect November 23, 1970, substituted reference to Welfare and Institutions Code for reference to Government Code, deleted wording following "in section 6359" from last sentence of first paragraph, and added second paragraph. Stats. 1971, p. 3713, in effect December 14, 1971, operative January 1, 1972, added the words "furnished or" preceding "served to students".

Construction of prior exemption.—This section constitutes a change in the law rather than a clarification of former Section 2(e) of the Retail Sales Tax Act, under which the tax did not apply to sales of meals served by employers or employee organizations exclusively to employees. An employer who served meals to its employees and the employees of subcontractors did not serve meals "exclusively" to its employees and was required to pay tax on the sale of the meals to employees and others. Twaits v. State Board of Equalization (1949) 93 Cal.App.2d 796.

6363.2. Auctions; nonprofit organizations. There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, tangible personal property that is sold to a successful bidder at an auction that is conducted by, or affiliated with, a nonprofit organization, if the purpose of that auction is to obtain revenue for the funding of a shelter for homeless individuals and families and those revenues obtained are actually expended for that purpose. For purposes of this section, "nonprofit organization" means an organization that is exempt from taxation under Section 23701d. This section shall not apply to any sale at an auction that is conducted more than once during any 12-month period.

History—Added by Stats. 1994, Ch. 855, in effect September 27, 1994, but operative January 1, 1995.

Text of Section Operative January 1, 2002 Through January 1, 2012

6363.3. Nonprofit thrift stores. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, used pieces of clothing, household items, or other retail items sold by thrift stores operated by a nonprofit organization if the purpose of that thrift store is to obtain revenue for the funding of medical, hospice, or social services to chronically ill individuals, and at least 75 percent of the net income derived from operations of the thrift store are actually expended for the purpose of providing medical, hospice, or social services to the chronically ill.

(b) For purposes of this section, "nonprofit organization" means an organization that provides medical, hospice, or social services to individuals with a chronic, life-threatening illness, as defined in subdivision (c) of Section 1568.01 of the Health and Safety Code, and is exempt from taxation under Section 23701d.

History— Added by Stats. 1996, Ch. 781 (AB 3187), in effect September 23, 1996, but operative January 1, 1997. Stats. 2001, Ch. 383 (AB 180), in effect October 1, 2001, substituted ", hospice or" for "and" after "of medical" twice in the first sentence, and in the second sentence of subdivision (a), and substituted "2007" for "2002" in subdivision (b). Stats. 2006, Ch. 373 (SB 1341), in effect September 20, 2006, substituted "the net income derived from operations of the thrift store" for "those net revenues" after "at least 75 percent of" in subdivision (a); created new subdivision (b) with the former second sentence of subdivision (a); relettered former subdivision (b) as (c) and substituted "2012" for "2007" after "January 1," therein. Stats. 2011, Ch. 289 (AB 289), in effect September 21, 2011, substituted "remain in effect only until" for "cease to be operative on" after "This section shall" and substituted "2019" for "2012" after "January 1," in subdivision (c). Stats. 2018, Ch. 741 (SB 1484), in effect September 23, 2018, substituted "2029" for "2019" after "January 1," in subdivision (c).

6363.4. Military welfare society thrift stores. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, tangible personal property sold by a thrift store located on a military installation and operated by a designated entity that, in partnership with the United States Department of Defense, provides financial, educational, and other assistance to members of the Armed Forces of the United States, eligible family members, and survivors that are in need.

(b) For purposes of this section, "designated entity" means a military welfare society described in Section 1033 of Chapter 53 of Part II of Subtitle A of Title 10 of the United States Code.

History—Added by Stats. 2009, Ch. 615 (SB 765), in effect October 11, 2009. Amended by Stats. 2010, Ch. 328 (SB 1330), in effect January 1, 2011, added "a" after "and operated by" and deleted the extra period after "are in need" in subdivision (a). Amended by Stats. 2013, Ch. 72 (AB 163), in effect August 12, 2013, substituted "2024" for "2014" after "January 1," in subdivision (c). Amended by Stats. 2022, Ch. 225 (SB 1041), in effect August 29, 2022, deleted subdivision (c), which read: "This section shall remain in effect only until January 1, 2024."

Note.—Section 2 of Ch. 226 (SB 1041) of Stats. 2022 states, "For the purpose of complying with Section 41 of the Revenue and Taxation Code, the Legislature finds and declares all of the following:

(a) The objective of the exemption allowed by this section is to provide an incentive for thrift stores to continue to operate on military installations in partnership with the United States Department of Defense to provide financial, educational, and other assistance to members of the Armed Forces of the United States, eligible family members, and survivors in need.

(b) The performance indicators used to determine if the exemption is achieving the stated objective shall be the amount of charitable giving by recipients of this relief and the number of service members who receive that aid.

(c) (1) The California Department of Tax and Fee Administration shall submit a report to the Legislature no later than January 1, 2028, regarding this exemption.

(2) The report to be submitted pursuant to paragraph (1) shall be submitted in compliance with Section 9795 of the Government Code."

6363.5. Religious organization meals. There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use or other consumption in this state of, meals and food products for human consumption furnished or served by any religious organization at a social or

other gathering conducted by it or under its auspices, if the purpose in furnishing or serving the meals and food products is to obtain revenue for the functions and activities of the organization and the revenue obtained from furnishing or serving the meals and food products is actually used in carrying on such functions and activities.

For the purposes of this section, "religious organization" means any organization the property of which is exempt from taxation pursuant to subdivision (f) of Section 3 of Article XIII of the State Constitution.

History—Added by Stats. 1961, p. 1588, in effect September 15, 1961. Stats. 1971, p. 3713, in effect December 14, 1971, operative January 1, 1972, added the words "furnished or" and "furnishing or" preceding "served" and "serving", respectively. Stats. 1976, Ch. 1079, effective January 1, 1977, changed "Section 11" to "subdivision (f) of Section 3."

6363.6. Meals served to residents or patients of institutions. There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, meals and food products for human consumption furnished or served to and consumed by residents or patients of the following:

(a) A health facility as defined in Section 1250 of the Health and Safety Code, which holds the license required pursuant to Section 1253, or is exempt from the license requirement pursuant to subdivision (a) of Section 1270, or is operated by the United States.

(b) A community care facility as defined in Section 1502 of the Health and Safety Code, which holds the license required by Section 1508, or is a residential facility selected by a licensee pursuant to Section 1506 and exclusively used for the reception and care of persons placed by the licensee, or is exempt from the license requirement pursuant to subdivision (f) of Section 1505, or is operated by the United States.

(c) A residential care facility for the elderly, as defined in Section 1569.2 of the Health and Safety Code, that holds the license required by Section 1569.10 of the Health and Safety Code or is exempt from the license requirements pursuant to Section 1569.145 of the Health and Safety Code, or is operated by the United States.

(d) Any house or institution supplying board and room for a flat monthly rate and serving as a principal residence exclusively for persons 62 years of age or older and any housing that primarily serves older persons and that is financed by state or federal programs.

(e) An alcoholism recovery facility, as defined in Section 11834.02 of the Health and Safety Code, that holds the license required by Section 11834.30 of the Health and Safety Code. This subdivision shall apply to meals served by the facility on or after January 1, 1985.

(f) A drug abuse recovery or treatment facility, as defined in Section 11834.02 of the Health and Safety Code, that holds the license required by Section 11834.30 of the Health and Safety Code.

History—Added by Stats. 1968, p. 2555, in effect August 14, 1968, operative October 1, 1968. Stats. 1971, p. 3714, in effect December 14, 1971, operative January 1, 1972, added the words "furnished or" preceding "served" in the first paragraph of former section 6363.6. Stats. 1971, p. 3909 in effect December 17, 1971, relettered the section, corrected references to Welfare and Institutions Code, and added a subsection relating to certain patients released from state hospitals. Stats. 1971, p. 5143 (First Extra Session), operative January 1, 1972, repealed and reenacted the section and provided that it was the intent of the Legislature in enacting sections 22 and 23 of the act (applicable to section 6363.6) that the provisions of Stats. 1971, Ch. 1741 and Stats. 1971, Ch. 1807 of the 1971 Regular Session, both be given effect as they amend section 6363.6 of the Revenue and Taxation Code. Stats. 1974, Ch. 709, effective September 6, 1974, revised the exemptions and conformed the references to the Health and Safety Code. Stats. 1979, Ch. 1048, operative January 1, 1980, changed "patients and inmates" in first sentence to "residents and patients", added (c). Stats. 1987, Ch. 278, operative July 30, 1987, changed "residents and patients" in first sentence to "residents or patients", added (d) Stats. 1989, Ch. 919, in effect January 1, 1990, added subdivision (e). Stats. 1994, Ch. 702, in effect September 21, 1994, but operative January 1, 1995, substituted "the" for "such" after "placed by" in subdivision (b); added subdivision (c); relettered former subdivisions (c), (d), and (e) as (d), (e), and (f), respectively; and substituted "the" for "such" after "served by" in subdivision (d). Stats. 1995, Ch. 91, in effect January 1, 1996, added a comma after "use" and added "the following" after "patients of" in the first paragraph; substituted "11834.02" for "11834.11" after "Section", substituted "that" for "which" after "Code", and substituted "11834.30" for "11834.12" after "Section" in subdivisions (e) and (f).

Nonreusable hospital menus.—Paper menus used by hospital patients to order meals and returned to patients with meals are not exempt as component parts of those meals. American Hospital Supply Corp. v. State Board of Equalization (1985) 169 Cal.App.3d 1088.

6363.7. Meals delivered to elderly and disabled. There are exempted from the taxes imposed by this part, the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, meals that are delivered to homebound elderly or disabled persons by a nonprofit volunteer home delivery meal provider.

History—Added by Stats. 1995, Ch. 240, in effect August 1, 1995, operative January 1, 1996.

6363.8. Nonprofit veterans' organizations. There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use or other consumption in this state of, meals and food products for human consumption that are furnished or served by any nonprofit veterans' organization at a social or other gathering conducted by it or under its auspices, if the purpose in furnishing or serving the meals and food products is to obtain revenue for the functions and activities of the organization and the revenue obtained from furnishing or serving the meals and food products is actually used in carrying on those functions and activities.

History—Added by Stats. 2003, Ch. 721 (AB 189), in effect October 9, 2003, but operative April 1, 2004.

6363.9. Children’s diapers. On and after January 1, 2020, there are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, diapers designed, manufactured, processed, fabricated, or packaged for use by infants, toddlers, and children.

History—Added by Stats. 2019, Ch. 34 (SB 92), effective June 27, 2019. Amended by Stats. 2020, Ch. 8 (AB 85), in effect June 29, 2020, replaced the inoperative date of "January 1, 2022" with "July 1, 2023." Amended by Stats. 2021, Ch. 82 (AB 150), in effective July 16, 2021, deleted subdivision (a) designator; and deleted subdivision (b) which read "This section shall become inoperative on July 1, 2023."

Note.—Section 11 of Stats. 2019, Ch. 34 (SB 92) specifies:

(a) No later than May 15 of each fiscal year, beginning on May 15, 2020, the Department of Finance shall estimate the total dollar amount of revenue for the current fiscal year exempted under Sections 6363.9 and 6363.10 of the Revenue and Taxation Code from any tax levied pursuant to Section 6051 or 6201 of the Revenue and Taxation Code that would have otherwise been deposited in the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15 of the Revenue and Taxation Code.

(b) For the purposes of complying with subdivision (d) of Section 36 of Article XIII of the California Constitution, no later than June 30 of each fiscal year, beginning on June 30, 2020, the Controller shall transfer the total dollar amount estimated in subdivision (a) from the General Fund to the Local Revenue Fund 2011.

Note.—Section 12 of Stats. 2019, Ch. 34 (SB 92) specifies:

(a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.

(b) With respect to Section 6363.9 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares the following:

(1) The specific goals, purposes, and objectives of this act are to promote public health by increasing the affordability of, and expanding access to, diapers.

(2) (A) To measure the goals set forth in paragraph (1), the Legislative Analyst’s Office shall review the effectiveness of the tax exemption and may request information from the California Department of Tax and Fee Administration and any other relevant state government entity.

(B) On or before January 1, 2021, the Legislative Analyst’s Office shall submit a report, in compliance with Section 9795 of the Government Code, of the review completed pursuant to subparagraph (A) to the Assembly Committee on Revenue and Taxation and to the Senate Governance and Finance Committee. The report shall include, but is not limited to, both of the following:

(i) A recommendation on whether the exemption should be modified, extended, or allowed to become inoperative.

(ii) An assessment on whether more targeted approaches to providing families in need with adequate access to diapers are available.

(c) With respect to Section 6363.10 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares the following:

(1) The specific goals, purposes, and objectives of this act are to promote public health by increasing the affordability of, and expanding access to, menstrual hygiene products.

(i) A recommendation on whether the exemption should be modified, extended, or allowed to become inoperative.

(ii) An assessment on whether more targeted approaches to providing individuals in need with adequate access to menstrual hygiene products are available.

6363.10. Menstrual hygiene products. (a) On and after January 1, 2020, there are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, menstrual hygiene products.

(b) For purposes of this section, "menstrual hygiene products" shall only include the following:

(1) Tampons.

(2) Sanitary napkins primarily designed and labeled for menstrual hygiene use.

(3) Menstrual sponges.

(4) Menstrual cups.

History—Added by Stats. 2019, Ch. 34, Sec. 8. (SB 92) effective June 27, 2019. Amended by stats. 2020, Ch. 8 (AB 85), in effect June 29, 2020, and replaced the inoperative date of "January 1, 2022" with "July 1, 2023." Amended by Stats. 2021, Ch. 82 (AB 150), deleted subdivision (c), which read "This section shall become inoperative on July 1, 2023."