Were metal folding gates materials or fixtures, and how were sales and installation taxed?

Plain-English summary

Metal folding gates were materials rather than fixtures. Tax Counsel compared them to window screens and fences.

When finished gates were sold and shipped to a building owner, tenant, or prime contractor for that customer to install, the seller's total selling price was taxable, subject to the possible treatment of separately stated delivery charges.

When the gate company contracted to furnish and install the gates, it was the consumer of the materials and owed tax on its purchases from suppliers under the construction-contract rule.

Common questions

Were the gates fixtures?

No. The letter classified them as materials.

What if the customer installed finished gates?

The transaction was a taxable retail sale on the seller's selling price, with separately stated delivery considered under the transportation rule.

What if the gate company furnished and installed them?

The company was the consumer of the materials and paid tax on its supplier purchases.

Citations and references

• Former California Sales and Use Tax Ruling 11 — metal folding gates analogized to window screens and fences as materials, making the furnish-and-install contractor their consumer, applied; a copy was identified as enclosed but is not reproduced in the official PDF
• Former California Sales and Use Tax Ruling 50 — total selling price and possible separately stated delivery charges for finished-state gate sales applied; a copy was identified as enclosed but is not reproduced in the official PDF
• March 16, 1971 requester inquiry addressed to Bill Worthing — four finished-state sale or furnish-and-install transactions with building owners, tenants, and prime contractors 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/190-1920.pdf

Original ruling text

190.1920

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)

April 13, 1971
Mr. M. A. S--C--- G--- & Mfg. Co., Inc.
XXXX East --- Boulevard
--- ---, California XXXXX
RE:

SR -- XX XXXXXX

Dear Mr. S---:
Your inquiry of March 16, 1971, addressed to Mr. Bill Worthing regarding the taxability of the four transactions described below, has been referred to us for reply. 1. Metal folding gates sold and shipped to owner or tenant of building in finished state; owner or tenant to install. 2. Contract to sell and install the metal folding gates for customer on his premises. 3. Metal folding gates sold and shipped to prime contractor in finished state; contractor to install. 4. Contract to sell and install metal folding gates to prime contractor on his jobsite. With the possibility of separately stated delivery charges from your place of business to your customers, your total selling price in situations one and three are taxable. (See copy of Ruling 50, copy enclosed.) The proper measure of tax in situations two and four will depend on whether the gates are regarded as fixtures or materials under Ruling 11, copy enclosed. The gates in our opinion are liken to window screens or fences. We have held these items to be materials and we believe the gates should be considered in the same category. Under this reasoning you are the consumer of the materials and you should accordingly pay tax on the items purchases from your supplier as provided in the ruling. Very truly yours,

Glenn L. Rigby
Tax Counsel
GLT:lt
Enclosures