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Anne_C
Anne_C, Tax Attorney
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Experience:  Attorney, JD awarded with Certification in Tax Law
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I live in Nevada County California. In 2003 I purchased a small

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I live in Nevada County California. In 2003 I purchased a small vessel (vessel, motor and trailer) for $18,000. Each year from then, I have received a "personal Property-new boat value" tax statement. This was later followed by a "personal property-vessel" tax bill which was paid.
This year I noted a statement," As required by law, we add sales tax to the value shown in the guide (N.A.D.A). The combined amount becomes our assessed value."
I requested a copy of the California Code that required the addition of "sales tax" to the vessel value, when no sales had taken place. Their response was an excerpt from Xerox Corp.v.Orange County 66 Cal App.3d 746. The contents was was in conflict within itself.
Question: Is it legal to add "sale tax" to a vessel to sales amount to determine assessed value, when no sale has taken place?
Submitted: 4 years ago.
Category: Tax
Expert:  Anne_C replied 4 years ago.

Good evening.

 

I agree with you, but not because the Xerox decision is internally inconsistent. I don't think it is. However, your situation is inconsistent with this decision, which holds:

Hibernia Bank v. State Bd. of Equalization, 166 Cal. App. 3d 393 - Cal: Court of Appeals, 1st Dist., Div. 3 1985 "When the Legislature enacted the California Retail Sales Tax Act, it intended that the incidence of the tax be on the retailer, not upon the consumer. (Western L. Co. v. State Bd. of Equalization, supra, 11 Cal.2d at p. 162 400 and cases cited therein.) Although in Diamond National v. State Equalization Bd., supra, 425 U.S. 268, the United States Supreme Court declared that the incidence of the California sales tax fell on a national bank as purchaser, rather than on the vendor, California cases decided after Diamond National have consistently held that for state purposes, the legal incidence of the California sales tax continues to be on the retailer. (Xerox Corp. v. County of Orange (1977) 66 Cal. App.3d 746, 757 [136 Cal. Rptr. 583]; Occidental Life Ins. Co. v. State Bd. of Equalization (1982) 135 Cal. App.3d 845, 847-851 [185 Cal. Rptr. 779]; see also Western States Bankcard Assn. v. City and County of San Francisco, supra, 19 Cal.3d at pp. 217-219; United States v. State Bd. of Equalization, supra, 639 F.2d at p. 465, fn. 4.) From: http://scholar.google.com/scholar_case?case=7133154759584653590&q=%2266+Cal.App.3d+746%22&hl=en&as_sdt=2004

[Sorry about the bolding, I wasn't able to turn it off.]

 

However, the following is in the State of California's Board of Equalization Assessor's Handbook Sections 504 and 576:

 

http://www.boe.ca.gov/pdf/AH504.pdf

 

In Xerox Corporation v. County of Orange, (1977) 66 Cal.App.3d 746,139 the Court indicated that under the market value concept, where price is the basis of value, the sales tax and freight charges are elements of value (page 74).

 

Page 93 states, "Additional elements of value seldom reflected in sales comparison

value guides are sales tax, freight, discounts, and other costs unique to specific equipment. These costs must be added to (or subtracted from) the sales price of equipment where appropriate to arrive at full cash value for property tax purposes."

I am also using Assessor's Handbook 576, http://www.boe.ca.gov/proptaxes/pdf/ah576.pdf "Sales tax, an element of value, is not included in the values shown in any of the value guide books and the appropriate tax should be added to the listed value to arrive at full cash value for property tax purposes." (page 13)

*****

 

So, although I think you are right on this issue, the Assessor's Handbooks give different guidelines - which means that it is going to be hard to convince them they are wrong.

Anne_C, Tax Attorney
Category: Tax
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Experience: Attorney, JD awarded with Certification in Tax Law
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Anne_C
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Attorney, JD awarded with Certification in Tax Law