- Court Ruling on Out-of-State Shipment Exemption: A California superior court ruled in Case No. CGC23607195 that the California Department of Tax and Fee Administration’s (CDTFA) interpretation of the out-of-state shipment exemption was more consistent with statutory construction, caselaw, and legislative history than the taxpayer’s interpretation.
- Use Tax Applicability on Repair Parts: The court determined that repair parts used by the taxpayer to repair medical equipment shipped from out-of-state were subject to California use tax, even though the repaired devices were ultimately shipped back out of state for exclusive use outside California.
- Nature of Repairs Under Contracts: The court emphasized that the medical equipment was in California for the purpose of repairs under lump-sum contracts, rather than merely for storage or transit, which justified the imposition of use tax on the incorporated repair parts.
Source Deloitte
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