Newco Leasing, Inc. v. State Board of Equalization

Plaintiffs Southwest Leasing Corporation (Southwest) and Newco Leasing, Incorporated (Newco), both California corporations, instituted an action against defendant, the California State Board of Equalization (Board), seeking a refund of use taxes paid under protest.

Both actions, involving nearly identical facts and issues, were consolidated at the superior court level and tried before a judge sitting without a jury on an agreed statement of facts and limited testimonial and documentary evidence. The trial court entered judgment for defendant Board. Plaintiffs have appealed. We affirm.

Although plaintiffs have attacked the imposition of the tax on various grounds, the issue simply stated, is whether the exemption from the payment or collection of sales and use tax enjoyed by individuals or business entities engaged in the leasing to the public of certain types of motor vehicles, also exempts from tax the transfer and assignment of the vehicles and the leases from one lessor to another.

The sales tax in California is an excise tax on the privilege of selling tangible personal property at retail. (Rev. & Tax. Code, § 6051.) Its counterpart or complementary tax—the use…