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California Clarifies Partial Exemption for Manufacturing and Research Equipment


 Partial lunar eclipse. Partial exemption.

 

California State Board of Equalization has now adopted a new regulation that raises awareness and provides guidance on the implementation and interpretation of that partial exemption.

Regulation 1525.4:

  • Prescribes “the form of the partial exemption certificate that the purchaser is statutorily required to furnish to the retailer.”
  • Prescribes “the circumstances under which a retailer may accept such a partial exemption certificate in good faith for purposes of relieving the retailer of liability for the sales tax or the duty of collecting the use tax from the purchaser.”
  • Provides a definition for the phrase “primarily engaged.”
  • Explains the meaning of the phrase “special purpose buildings and foundations.”
  • Clarifies how the partial exemption applies in the context of lease transactions and construction contracts.

The approved regulation takes effect September 25, 2014. On that date, its provisions become retroactively effective on July 1, 2014, the date the partial exemption took effect.

Read more about California’s partial exemption for manufacturing, research and development.

Automated sales tax software helps businesses manage sales tax exemptions, both partial and complete. Learn more.

photo credit: mawel via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.