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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
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570.0000 Use of Property in State and Use Tax Generally
Annotation 570.0670
(b) Use in State, Purchased for—Intent of Purchaser
570.0670 "Storage" and "Use" Exclusion—Commingled Property. A purchaser purchases property which is consumed at locations both within and outside California. The seller of the property ships the property from his California warehouse and out-of-state warehouse to the purchaser's California receiving warehouse. Property shipped from the seller's California warehouse and out-of-state warehouses are identical in many instances. The purchaser at the time of purchase does not know at which location the property will be used. All property purchased is commingled.
Since the purchaser is consuming the property purchased and the seller is aware of this, a resale certificate cannot be accepted in good faith. Either the sales or use tax applies to property delivered to the purchaser's California warehouse. The purchaser cannot issue a "use tax exclusion certificate" since all property is commingled and he does not know what specific property will be shipped to an out-of-state location. Also, not all of the property will be removed from the state.
The purchaser may file a claim for refund for use tax not due. To accomplish this, the purchaser should maintain updated inventory records showing what percentage of the property is shipped from the seller's California warehouse and the percentage from out-of-state warehouses. The measure of the refund is calculated by multiplying the percentage of inventory from the out-of-state warehouse to total inventory at the time the property is removed from the state times the total purchase price of property removed from the state. 5/19/93.