City of South San Francisco v. Board of Equalization
232 Cal. App. 4th 707
| Cal. Ct. App. | 2014Background
- Seven California cities challenged SBE’s view that the Bradley-Burns Uniform Local Sales and Use Tax Law is identical to the State Tax Law for determining whether to impose a local sales tax or a local use tax.
- Transactions at issue were negotiated in California cities, but the goods were shipped from out-of-state directly to California consumers, with title passing outside California under CUCC rules.
- SBE’s Regulation 1803 provides that local sales tax applies when a state sales tax applies and local use tax applies when a state use tax applies; the cities attacked retroactive application.
- The trial court held Regulation 1803 invalid, but prospective in effect, and the petitions proceeded to appellate review.
- The Court of Appeal reversed the trial court, affirmed SBE’s use of title-passage rules under CUCC, and remanded for new judgments consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does 7205(a) specify when a local sales tax applies? | City Petitioners: local sales tax applies to all transactions negotiated in-state. | SBE: 7205(a) only sets place-of-sale rules once a sales tax is determined to apply; it does not itself dictate applicability. | 7205(a) does not specify when a sale tax applies; it sets place-of-sale rules, not applicability. |
| Was SBE permitted to use the CUCC to determine when title passes for local-tax purposes? | City Petitioners: CUCC is not controlling and overrides local-tax rules. | SBE; CUCC is consistent with State Tax Law and Bradley-Burns Act for determining transfer of title. | SBE did not abuse discretion; CUCC determination is consistent with the statutes. |
Key Cases Cited
- City of Pomona v. State Bd. of Equalization, 53 Cal.2d 305 (1959) (place of sale/revenue allocation in local tax context)
- Diebold, Inc. v. State Bd. of Equalization, 168 Cal.App.2d 628 (1959) (passage of title determines sale for tax purposes)
- Associated Beverage Co. v. Board of Equalization, 224 Cal.App.3d 192 (1990) (CUCC used to determine when a sale occurs for use-tax purposes)
- Cedars-Sinai Med. Ctr. v. State Bd. of Equalization, 162 Cal.App.3d 1182 (1984) (structured financing/leasing context; sale definition relevance)
- Estate of McDill, 14 Cal.3d 831 (1975) (statutory interpretation and existing law in tax context)
- California Correctional Supervisors Org. v. Dep’t of Corr., 96 Cal.App.4th 824 (2002) (arbitrary-and-capricious review standard in administrative decisions)