California court finds promotional items taxable.

In California, a recent appellate court decision found Yamaha Corporation was subject to use tax on “gifts” or promotional items shipped out of state. Yamaha removed musical instruments from inventory, tax-free, and shipped them via common carrier to retailers and others as promotional gifts. The California court of appeals ruled that when the merchandise is delivered to a common carrier in California, the transaction is completed within California and therefore is subject to the state’s use tax (Yamaha Corp. of America v. State Board of Equalization, California Court of Appeals, Second Appellate District, Division Three, June 29, 1999)

Posted on March 15, 2000