Exemption Certificates - Exemptions - Revenue & Taxation - CA

Section § 6421

This law states that if someone buys something and tells the seller in writing that the item will be used for a purpose that makes it exempt from sales tax, but then uses it differently, they must pay sales tax as if they were selling the item themselves. The buyer is responsible for the sales tax, and the value of the item when it was first purchased is considered the sales price. The seller is only off the hook for the tax if they sincerely believed the buyer's certification.

Also, for this rule, the term 'use' means the same as in another law but without a specific exclusion.

(a) If a purchaser certifies in writing to a seller that the property purchased will be used in a manner or for a purpose entitling the seller to regard the gross receipts from the sale as exempted by this chapter from the computation of the amount of the sales tax, and uses the property in some other manner or for some other purpose, the purchaser shall be liable for payment of sales tax as if he were a retailer making a retail sale of the property at the time of such use, and the cost of the property to him shall be deemed the gross receipts from such retail sale. The certificate shall relieve the seller from liability for the sales tax only if it is taken in good faith.

(b) For purposes of this section, “use” is the same as defined in Section 6009 without the exclusion defined in Section 6009.1.

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Section § 6422.1

This section allows for the board to issue tax exemption certificates for certain vehicles, commercial coaches, and mobilehomes. These certificates help ensure that these items can be registered by relevant departments without a tax issue. The certificate can state that no use tax is due, or that it has been or will be paid appropriately, without delaying registration. If these certificates are misused, such as through forgery or alteration, it is considered a misdemeanor.

The board may provide for exemption certificates and other tax clearance certificates to be issued by it or by retailers selling vehicles as defined in Article 1 (commencing with Section 6271) of Chapter 3.5, commercial coaches as defined in Section 18001.8 of the Health and Safety Code or mobilehomes as defined by Section 18008 of the Health and Safety Code. The certificates shall be used to allow a completion of registration of a vehicle by the Department of Motor Vehicles or a commercial coach or mobilehome by the Department of Housing and Community Development. The certificates may indicate that the board finds that no use tax is due or is likely to become due with respect to the storage, use, or other consumption of the vehicle, commercial coach, or mobilehome, or that the tax has been paid or is to be paid in a manner not requiring the withholding of a registration or transfer of registration. The certificates shall be in such form as the board may prescribe and shall be executed, issued and accepted for clearance of registration on such conditions as the board may prescribe. The issuance, alteration, forgery, or use of any such certificate in a manner contrary to the requirements of the board constitutes a misdemeanor.

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Section § 6423

This law deals with the certification process for purchasers who claim a refund or credit on their income tax for federal excise tax paid on fuel. Purchasers must certify correctly and use a prescribed form to ensure they are truly eligible for such refunds or credits. If they fail to receive the refund or tax credit, they may owe sales or use tax. Sellers are protected from tax liability if they accept these certificates in good faith. However, purchasers who falsely certify their eligibility, knowing full well they aren't entitled to the refund or credit, are liable for the state sales or use tax. Additionally, they face penalties, including a fine or interest, if done for personal gain or to evade taxes. False certification for the purpose of evading tax payments is a misdemeanor offense.

(a) A purchaser certifying under subparagraph (B) of paragraph (4) of subdivision (c) of Section 6011 or subparagraph (B) of paragraph (4) of subdivision (c) of Section 6012 that he or she is entitled to either a direct refund or credit against his or her income tax for the federal excise tax paid shall do so in a form prescribed by the board.

(b) If the purchaser provides the certificate referred to in subdivision (a) and uses the fuel in a manner that does not entitle the purchaser to a direct refund or credit against his or her income tax for the federal excise tax paid or if the purchaser does not receive such a refund or credit, the purchaser shall be liable for sales or use tax measured by the amount of federal excise tax paid to the extent the seller has not remitted sales or use tax measured by that amount. The certificate shall relieve the seller from liability for any sales or use tax due only if it is taken in good faith.

(c) Any person, including any officer or employee of a corporation, who certifies under subparagraph (B) of paragraph (4) of subdivision (c) of Section 6011 or subparagraph (B) of paragraph (4) of subdivision (c) of Section 6012 that he or she is entitled to either a direct refund or credit against his or her income tax for the federal excise tax paid on fuel when that person knows at the time of purchase that he or she shall not be entitled to the refund or credit is liable to the state for the amount of sales or use tax that would be due if he or she had not so certified. In addition to the tax, interest, and other penalties, the person shall be liable to the state for a penalty of 10 percent of the tax or five hundred dollars ($500), whichever is greater, for purchases made for personal gain or to evade payment of taxes.

(d) Any person, including any officer or employee of a corporation, who, for the purpose of evading payment to the seller of a portion of the tax applicable to the transaction, certifies under subparagraph (B) of paragraph (4) of subdivision (c) of Section 6011 or subparagraph (B) of paragraph (4) of subdivision (c) of Section 6012 that he or she is entitled to either a direct refund or credit against his or her income tax for the federal excise tax paid on fuel when that person knows at the time of purchase that he or she is not entitled to such a refund or credit is guilty of a misdemeanor punishable as provided in Section 7153.

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