Was labor to mount customer-supplied microfilm onto customer-supplied aperture cards taxable?

Plain-English summary

The customer supplied both exposed, developed microfilm and keypunched aperture IBM cards. The business's job was to place the film onto the cards to produce usable mounted film.

The letter compared that work to mounting color-film transparencies into slide frames. Because the labor created the desired article for the first time, it was producing, fabricating, and processing under section 6006(b), and the receipts were taxable.

The repair-labor exclusion did not apply because the work was not repairing or reconditioning an existing article.

Citations and references

• California Revenue and Taxation Code section 6006(b) (as cited)
• Sales and Use Tax Ruling 15 (identified as enclosed and explaining the cited section, but not reproduced in the source)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/120-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/120-0120.pdf

Original ruling text

120.0120

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

October 9, 1962

--- --- ----- --- ----- --- ----- --- --Gentlemen:
We are in receipt of your letter of October 1 concerning the application of sales tax to your receipts for placing exposed, developed microfilm on key-punched, aperture IBM cards, both the film and the cards having been supplied you by the County of Los Angeles. The operation appears similar to the mounting of transparencies of color film into the frames in order to produce a complete slide. This has been held to be a producing, fabricating and processing under Section 6006(b) of the Sales and Use Tax Law, quoted and explained in the enclosed copy of ruling 15. The operation which you describe appears to be substantially similar and to have the same objective, i.e., to produce a usable, mounted film. We believe that this operation is also a sale under Section 6006(b), receipts from which are, accordingly, taxable. You will note from ruling 15 that tax does not apply to charges for repair or reconditioning labor, but the labor involved in the present case appears not to be repair or reconditioning labor but to be the creation for the first time of the desired article, i.e., the card with the film mounted thereon. Very truly yours,

E. H. Stetson
Tax Counsel
EHS:fb
Enclosures
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Sacramento – District Administrator