Was a road-oil supplier a consumer or retailer in road-surface reconditioning?

Plain-English summary

A road-oil supplier was a consumer when it was responsible for ripping or processing the old road-surface material with oil, mixing it, spreading it, compacting it, and ultimately placing the reconditioned surface in its final roadway position.

The result changed when a person only contracted to furnish and spread road oil on the ripped-up roadbed and was not responsible for mixing, spreading, and compacting the resulting surfacing material. That person was the retailer of the oil.

Common questions

What made the supplier a consumer?

Responsibility for processing and final placement of the completed road surface.

What made the supplier a retailer?

Stopping at furnishing and spreading oil while others completed mixing, spreading, and compaction.

Did merely working at the roadsite decide the issue?

No. The scope and final responsibility controlled.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/190-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/190-0640.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

190.0640
Place:
Date:
To:

Fresno – Tax Administrator

From:

Headquarters – Sales Tax Counsel (EHS:JDP)

Re:

Furnishing and Spreading Liquid Asphalt

Sacramento
May 28, 1957

As indicated in your letter of May 23, there is a method of road repairing which was not touched upon in our letter of May 22. We believe you have correctly analyzed the problem. Accordingly, we agree that the tax should apply as suggested in your memorandum. However, to obviate any misunderstanding, we shall set forth the facts here. One method of repairing roads consists of ripping up about the top six inches of the old road surface and applying road oil thereto. This combination of oil and earth from the old roadway is then mixed, spread and compacted to form a reconditioned surface. It is our opinion that the supplier of the road oil is a consumer where he is responsible for processing the road surface material and ultimately placing it in its final resting place upon the roadway. Where a person contracts to furnish and spread road oil upon the ripped-up surface of the roadbed and is not responsible for the mixing, spreading and compacting of the resulting road surfacing material, the person furnishing and spreading the oil is the retailer thereof.

E. H. Stetson
JDP:tl