California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 10 - Matters Involving the Federal Government › Section 1616 - Federal Areas

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In
				  General. Tax applies to the sale or use of tangible personal property upon
				  federal areas to the same extent that it applies with respect to sale or use
				  elsewhere within this state.
(b)
				  Alcoholic Beverages. Manufacturers, wholesalers and rectifiers who deliver or
				  cause to be delivered alcoholic beverages to persons on federal reservations
				  shall pay the state retailer sales tax on the selling price of such alcoholic
				  beverages so delivered, except when such deliveries are made to persons or
				  organizations which are instrumentalities of the Federal Government or persons
				  or organizations which purchase for resale.
Sales to officers' and non-commissioned officers' clubs and
					 messes may be made without sales tax when the purchasing organizations have
					 been authorized, under appropriate regulations and control instructions, duly
					 prescribed and issued, to sell alcoholic beverages to authorized
					 purchasers.1
(c) Sales Through Vending Machines. Sales
				  through vending machines located on Army, Navy, or Air Force installations are
				  taxable unless the sales are made by operators who lease the machines to
				  exchanges of the Army, Air Force, Navy, or Marine Corps, or other
				  instrumentalities of the United States, including Post Restaurants and Navy
				  Civilian Cafeteria Associations, which acquire title to and sell the
				  merchandise through the machines to authorized purchasers.
For the exemption to apply, the contracts between the
					 operators and the United States instrumentalities and the conduct of the
					 parties must make it clear that the instrumentalities acquire title to the
					 merchandise and sell it through machines leased from the operators to
					 authorized purchasers.
(d)
				  Indian Reservations.
(1) In General. Except
				  as provided in this regulation, tax applies to the sale or use of tangible
				  personal property upon Indian reservations to the same extent that it applies
				  with respect to sale or use elsewhere within this state.
(2) Definitions. For purposes of this
				  regulation "Indian" means any person of Indian descent who is entitled to
				  receive services as an Indian from the United States Department of the
				  Interior.
Indian organizations are entitled to the same exemption as
					 an Indian. "Indian organization" includes Indian tribes and tribal
					 organizations and also includes partnerships all of whose members are Indians.
					 The term includes corporations organized under tribal authority and wholly
					 owned by Indians. The term excludes other corporations, including other
					 corporations wholly owned by Indians. "Reservation" means Indian country as
					 defined in section
					 1151 of title 18 of the United
					 States Code. The term includes reservations, rancherias, and any land held by
					 the United States in trust for any Indian tribe or individual Indian. "On a
					 reservation" and "on an Indian reservation" means within the boundaries of a
					 reservation.
(3) Sales by
				  On-Reservation Retailers.
(A) Sales by
				  Indians.
1. Sales by Indians to Indians who
				  reside on a reservation. Sales tax does not apply to sales of tangible personal
				  property made to Indians by Indian retailers negotiated at places of business
				  located on Indian reservations if the purchaser resides on a reservation and if
				  the property is delivered to the purchaser on a reservation. The purchaser is
				  required to pay use tax only if, within the first 12 months following delivery,
				  the property is used off a reservation more than it is used on a
				  reservation.
2. Sales by Indians to
				  non-Indians and Indians who do not reside on a reservation. Sales tax does not
				  apply to sales of tangible personal property by Indian retailers made to
				  non-Indians and Indians who do not reside on a reservation when the sales are
				  negotiated at places of business located on Indian reservations if the property
				  is delivered to the purchaser on the reservation. Except as exempted below,
				  Indian retailers are required to collect use tax from such purchasers and must
				  register with the Department for that purpose.
3. Use tax does not apply to meals, food, and
				  beverages purchased from an Indian retailer at an eating or drinking
				  establishment, such as a restaurant or bar, on an Indian reservation when the
				  meals, food, and beverages are purchased for consumption on the Indian
				  reservation.
(B) Sales by
				  non-Indians.
1. Sales by non-Indians to
				  Indians who reside on a reservation. Sales tax does not apply to sales of
				  tangible personal property made to Indians who reside on a reservation by
				  retailers when the sales are negotiated at places of business located on Indian
				  reservations if the property is delivered to the purchaser on a reservation.
				  The sale is exempt whether the retailer is a federally licensed Indian trader
				  or is not so licensed. The purchaser is required to pay use tax only if, within
				  the first 12 months following delivery, the property is used off a reservation
				  more than it is used on a reservation.
2. Sales by non-Indians to non-Indians and
				  Indians who do not reside on a reservation. Either sales tax or use tax applies
				  to sales of tangible personal property by non-Indian retailers to non-Indians
				  and Indians who do not reside on a reservation, except as provided in
				  subdivision (d)(3)(B)3.
3. Sales
				  tax does not apply to sales of meals, food, and beverages to a non-Indian or an
				  Indian who does not reside on a reservation by a non-Indian operating an eating
				  or drinking establishment, such as a restaurant or bar, on an Indian
				  reservation, pursuant to a lease or sublease, when the sales are subject to an
				  Indian tribe's sales tax and the meals, food, and beverages are sold for
				  consumption on the Indian reservation. Sales tax does not apply to sales of
				  meals, food, and beverages to an Indian who resides on a reservation by a
				  non-Indian operating an eating or drinking establishment on an Indian
				  reservation, as provided in subdivision (d)(3)(B)l. Use tax does not apply to
				  meals, food, and beverages purchased by a non-Indian or an Indian who does not
				  reside on a reservation from a non-Indian operating an eating or drinking
				  establishment, such as a restaurant or bar, on an Indian reservation, pursuant
				  to a lease or sublease, when the purchase is subject to an Indian tribe's sales
				  or use tax and the meals, food, and beverages are purchased for consumption on
				  the Indian reservation. Use tax does not apply to meals, food, and beverages
				  purchased by an Indian who resides on a reservation from a non-Indian operating
				  an eating or drinking establishment on an Indian reservation, when the meals,
				  food, and beverages are purchased for consumption on the Indian reservation, as
				  provided in subdivision (d)(3)(B)l.
4. Presumptions.
The following presumptions apply to subdivisions (d)(3)(A)3
					 and (d)(3)(B)3 of this regulation:
a.
				  It shall be presumed that all meals, food, and beverages sold or purchased from
				  an eating or drinking establishment on an Indian reservation are for
				  consumption on the reservation, except meals, food, and beverages sold or
				  purchased from a drive through counter or window or for delivery off the
				  reservation.
b. It shall be
				  presumed that meals, food, and beverages sold or purchased from an eating or
				  drinking establishment's drive through counter or window are for consumption
				  off the Indian reservation.
5. Subdivisions (d)(3)(A)3 and (d)(3)(B)3 of
				  this regulation do not apply to meals, food, and beverages sold or purchased
				  for delivery off an Indian reservation. When sales of meals, food, and
				  beverages delivered by the retailer from their establishment to a location off
				  the Indian reservation are taxable, the retailer may report the tax using a
				  percentage developed from a test period. This test is subject to audit, and it
				  is the retailer's responsibility to maintain records to support that their
				  percentage accurately reflects the taxable percentage.
6. Regulation 1603,
Taxable Sales of
				  Food Products
, prescribes the application of tax to meals, food, and
				  beverages when they are sold or purchased for consumption off an Indian
				  reservation.
(C) Resale
				  Certificates. Persons making sales for resale of tangible personal property to
				  retailers conducting business on an Indian reservation should obtain resale
				  certificates from their purchasers. If the purchaser does not have a permit and
				  all the purchaser's sales are exempt under paragraph (d)(3)(A) of this
				  regulation, the purchaser should make an appropriate notation to that effect on
				  the certificate in lieu of a seller's permit number (see Regulation 1668, Sales
				  for Resale).
(4) Sales by
				  Off-Reservation Retailers.
(A) Sales Tax--In
				  General. Sales tax does not apply to sales of tangible personal property made
				  to Indians negotiated at places of business located outside Indian reservations
				  if the property is delivered to the purchaser and ownership to the property
				  transfers to the purchaser on the reservation. Generally ownership to property
				  transfers upon delivery if delivery is made by facilities of the retailer and
				  ownership transfers upon shipment if delivery is made by mail or carrier.
				  Except as otherwise expressly provided herein, the sales tax applies if the
				  property is delivered off the reservation or if the ownership to the property
				  transfers to the purchaser off the reservation.
(B) Sales Tax--Permanent Improvements--In
				  General. Sales tax does not apply to a sale to an Indian of tangible personal
				  property (including a trailer coach) to be permanently attached by the
				  purchaser upon the reservation to realty as an improvement if the property is
				  delivered to the Indian on the reservation. A trailer coach will be regarded as
				  having been permanently attached if it is not registered with the Department of
				  Motor Vehicles. Sellers of property to be permanently attached to realty as an
				  improvement should secure exemption certificates from their purchasers (see
				  Regulation 1667, Exemption Certificates).
(C) Sales Tax--Permanent
				  Improvements--Construction Contractors.
1.
				  Indian contractors. Sales tax does not apply to sales of materials to Indian
				  contractors if the property is delivered to the contractor on a reservation.
				  Sales tax does not apply to sales of fixtures furnished and installed by Indian
				  contractors on Indian reservations. The term "materials" and "fixtures" as used
				  in this paragraph and the following paragraph are as defined in Regulation
				  1521, Construction Contractors.
2.
				  Non-Indian contractors. Sales tax applies to sales of materials to non-Indian
				  contractors notwithstanding the delivery of the materials on the reservation
				  and the permanent attachment of the materials to realty. Sales tax does not
				  apply to sales of fixtures furnished and installed by non-Indian contractors on
				  Indian reservations.
(D)
				  Use Tax--In General. Except as provided in paragraphs (d)(4)(E) and (d)(4)(F)
				  of this regulation, use tax applies to the use in this state by an Indian
				  purchaser of tangible personal property purchased from an off-reservation
				  retailer for use in this state.
(E)
				  Use Tax--Exemption. Use tax does not apply to the use of tangible personal
				  property (including vehicles, vessels, and aircraft) purchased by an Indian
				  from an off-reservation retailer and delivered to the purchaser on a
				  reservation unless, within the first 12 months following delivery, the property
				  is used off a reservation more than it is used on a reservation.
(F) Leases. Neither sales nor use tax applies
				  to leases otherwise taxable as continuing sales or continuing purchases as
				  respects any period of time the leased property is situated on an Indian
				  reservation when the lease is to an Indian who resides upon the reservation. In
				  the absence of evidence to the contrary, it shall be assumed that the use of
				  the property by the lessee occurs on the reservation if the lessor delivers the
				  property to the lessee on the reservation. Tax applies to the use of leased
				  vehicles registered with the Department of Motor Vehicles to the extent that
				  the vehicles are used off the reservation.
(G) Property Used in Tribal Self-Governance.
				  Sales and use tax does not apply to sales of tangible personal property to and
				  the storage, use, or other consumption of tangible personal property by the
				  tribal government of an Indian tribe that is officially recognized by the
				  United States if:
1. The tribal government's
				  Indian tribe does not have a reservation or the principal place where the
				  tribal government meets to conduct tribal business cannot be its Indian tribe's
				  reservation because the reservation does not have a building in which the
				  tribal government can meet or the reservation lacks one or more essential
				  utility services, such as water, electricity, gas, sewage, or telephone, or
				  mail service from the United States Postal Service;
2. The property is purchased by the tribal
				  government for use in tribal self-governance, including the governance of
				  tribal members, the conduct of intergovernmental relationships, and the
				  acquisition of trust land; and
3.
				  The property is delivered to the tribal government and ownership of the
				  property transfers to the tribal government at the principal place where the
				  tribal government meets to conduct tribal business.
The purchase of tangible personal property is not exempt
					 from use tax under this paragraph if the property is used for purposes other
					 than tribal self-governance more than it is used for tribal self-governance
					 within the first 12 months following delivery.
1 The following is a summary of
					 the pertinent regulations which have been issued:
(a) General. Air force regulation 34-57,
				  issued under date of February 9, 1968, army regulation 210-65, issued under
				  date of May 4, 1966, and navy general order No. 15, issued under date of May 5,
				  1965, authorize the sale and possession of alcoholic beverages at bases and
				  installations subject to certain enumerated restrictions.
(b) Air Force. Air force regulation 34-57,
				  paragraph 5, permits commissioned officers' and non-commissioned officers' open
				  messes, subject to regulations established by commanders of major air commands
				  to sell alcoholic beverages to authorized purchasers at bars and cocktail
				  lounges, and provides that commanders will issue detailed control instructions.
				  Paragraphs 8 and 9 require commanders of major air commands to issue
				  regulations relative to package liquor sales and to procurement of alcoholic
				  beverages, respectively.
(c) Army.
				  Army regulation 210-65, paragraph 9, provides that major commanders are
				  authorized to permit at installations or activities within their respective
				  commands the dispensing of alcoholic beverages by the drink or bottle.
				  Paragraph 11 of AR 210-65 provides that when authorized by major commanders as
				  prescribed in paragraph 9, AR 210-65, officers' and non-commissioned officers'
				  open messes may, subject to regulations prescribed by the commanding officer of
				  the installation or activity concerned, dispense alcoholic beverages by the
				  drink, and operate a package store.
(d) Navy. Navy general order No. 15 provides
				  that commanding officers may permit, subject to detailed alcoholic beverage
				  control instructions, the sale of packaged alcoholic beverages by officers' and
				  noncommissioned officers' clubs and messes and the sale and consumption of
				  alcoholic beverages by the drink in such clubs and
				  messes.