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The California Board of Equalization has provided notice for a final hearing on the adoption of proposed Regulation 1525.4 (Proposed Regulation), which would implement, interpret, and make specific the partial California sales and use tax exemption available for certain qualified purchasers of equipment purchased for manufacturing, research, and development that went into effect on July 1, 2014. More detail about such partial tax exemption is provided in an earlier Multistate Tax Update.

The final hearing is scheduled for July 17-18, 2014 in Sacramento, California. Among other things, the Proposed Regulation includes appendices for the exemption certificates for use in claiming the partial tax exemption and provides guidance about when an exemption certificate is timely provided to a retailer in order to claim the partial tax exemption. The Proposed Regulation provides that a “certificate will be considered timely if it is taken any time before the seller bills the purchaser for the property, any time within the seller’s normal billing or payment cycle, or any time at or prior to delivery of the property to the purchaser.”

Upon approval of the Proposed Regulation, the provisions of such regulation will apply retroactively to July 1, 2014.