Was a rock-fill supplier a retailer when it only dumped material for the buyer to finish?

Plain-English summary

The rock-fill supplier was a retailer because it only delivered and dumped the material. The buyer performed all spreading, leveling, and rolling needed to create the real-property improvement.

Each per-ton delivery was a taxable sale at the full selling price.

The supplier would have been a construction consumer only if it also completed the spreading, leveling, and rolling—actually performing the real-property improvement rather than merely furnishing fill.

Common questions

Did dumping fill at designated locations make the supplier a contractor?

No.

What work was missing?

Spreading, leveling, and rolling.

What was taxable?

The full per-ton selling price of each delivered load.

Citations and references

• Former Sales and Use Tax Ruling 11 — contractor-consumer distinction applied and identified as enclosed; the separate copy is not reproduced in the official PDF
• July 3 and August 3, 1953 request letters — identified as the inquiries answered; not reproduced in the official PDF

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/190-0820.pdf

Original ruling text

190.0820

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 7, 1953

A--- P--- and C--- Co.
P.O. Box XXXX T--- A----- --- XX, California
Attention:

Mr. D--- E. M--Assistant Secretary-Treasurer

Your letters of July 3
And August 3
Account No. - XXXXX

Gentlemen:
We understand that the E--- B--- E--- Co. is to furnish you with rock fill material on the basis of a unit price per ton, the material to be dumped at locations designated by you at your --plant. All spreading, leveling, and rolling of the fill will be done by yourself after delivery by the vendor. You inquire as to the taxability of this transaction. Under the above facts we would regard your supplier as a retailer of the fill. The tax, therefore, would apply to the full selling price of this product. In other words, each day there would be a taxable sale made to you of the fill delivered for 40¢ per ton price. It is true that we generally regard a construction contractor as a consumer of “materials”, as defined in Sales and Use Tax Ruling 11 (copy enclosed), used in fulfilling construction contracts and therefore not as a retailer thereof. However, for your supplier to be regarded as a consumer of the fill under a construction contract rather than as a retailer thereof, he would have to not only supply the fill but actually do all of the spreading, leveling, and rolling, that is, he would actually have to improve the real property. However, in the situation outlined by you, the supplier is merely a retailer furnishing the fill which will be used by you. Very truly yours,

W. W. Mangels
Assistant Counsel
WWM:ja
cc:

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