Were cooling towers and large tanks materials while small prefabricated tanks could be fixtures?

Plain-English summary

Cooling towers and large water tanks constructed or erected on concrete foundations or specially built towers were not fixtures. The installing contractor consumed the materials and tax was measured by material cost.

Small tanks required a different factual inquiry. Size alone did not control. A prefabricated tank with no onsite construction, erection, or assembly beyond attachment by plumbing connections, bolts, or similar means could be a fixture.

Common questions

Were large cooling towers fixtures?

No. They were built from materials consumed by the contractor.

Did size alone classify a small tank?

No.

When could a small tank be a fixture?

When prefabricated before delivery and only attached to realty at the site.

Citations and references

• Former California Sales and Use Tax Ruling 11 — materials and fixture definitions applied
• Board petitions for redetermination and resulting holding — cooling-tower manufacturers and contractors challenged materials treatment, and the Board held the larger towers were not fixtures; underlying petitions and Board record are not reproduced in the official PDF
• March 25, 1953 request letter and enclosed tank price sheet — larger-tower understanding and smaller-tank sizes described; 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/190-1420.pdf

Original ruling text

190.1420

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 1, 1953

E. A. J--- & Co.
XXXX --- --- Drive
--- --- XX, California
Attention:

Mr. E--- J---

Gentlemen:
A reply to your letter of March 25, 1953, was deferred pending action by the Board on petitions for redetermination filed by certain cooling tower manufacturers and contractors who contended that they should be regarded as sellers of “fixtures” even as to the larger towers, rather than as consumers under Sales and Use Tax Ruling 11 of “materials” as these terms are defined therein. The Board held that the towers were not “fixtures”, and that the tax applies, accordingly, to the sale to the installing contractor of the materials entering into the construction or erection of the towers. Thus we confirm your understanding “that in the manufacture and construction of cooling towers and large size water tanks, either on concrete foundations or upon specially built towers, which are affixed to realty, we are the consumers of materials at cost and are responsible for the tax on such cost price”. You further inquire concerning the status of smaller tanks and enclose a price sheet showing the various sizes. Size alone cannot be regarded as determinative of whether the tanks have the status of “fixtures”. You state they are all placed in position and connected to other realty by plumbing connections. In general, if the tanks are prefabricated, there being no labor or construction, erection, or assembly on the site of installation, the only labor performed there being the attaching of the tanks to realty by plumbing connections, bolts, etc., we believe the tanks should be regarded as “fixtures.” Very truly yours,

E. H. Stetson
Tax Counsel
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