Were track-mounted mobile shelving systems materials, fixtures, or equipment?

Plain-English summary

Classification depended on how the mobile storage system was actually installed in a particular building.

When roller tracks were made part of a building's permanent floor, the system fell within construction-contract treatment. For systems installed on their own added flooring, screwed over an existing completed floor, the general presumption was that the added floor and tracking were materials and the moving shelving was fixtures.

That presumption could be rebutted by facts showing the system was not intended as a permanent addition and would be removed when the building's use changed. Installation in specialized hospitals, banks, businesses, or government record-storage areas supported permanence because the system was suited to the building's activity.

The memorandum separately treated readily movable, easily demountable Sierra steel shelving as tangible personal property.

Common questions

Were all mobile shelving systems fixtures?

No. Actual installation facts and intended permanence controlled.

How were added floors and tracks generally classified?

As materials when they formed the installed base for a permanent system.

How were the moving shelves classified?

Generally as fixtures in a permanent installation.

What could rebut the presumption?

Evidence that the system was temporary machinery or equipment expected to be removed without building damage when the use changed.

Citations and references

• Audit of H--- Industries' Magic Aisles installations — proposed classification accepted for systems whose roller tracks became part of the permanent building floor; the date, scope, findings, and audit record are not supplied in the official PDF
• Product brochures — described installations in specialized hospitals, banks, businesses, and government record-storage buildings or areas; dates, titles, and copies are not supplied in the official PDF
• District inquiry and Mr. Najarian's instructed response — included a question about prospective application of tax; the source identifies the question and response but reproduces neither separate document

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/190-1985.pdf

Original ruling text

State of California

Memorandum

To:

Mr. Jack A. Najarian

From:

Legal (PRD)

Subject:

H--- Industries, Inc.

Board of Equalization

190.1985

May 12, 1976

SR -- XX XXXXXX

The Magic Aisles classification is dependent on the circumstances of their actual installation in a specific building. When the installation of the Magic Aisles are in buildings in which the roller tracks are made a part of the permanent floor of the building, the classification proposed by the audit must certainly be correct. But, apparently, the Aisles are also installed in their own new additional added flooring which contains the tracking and rests on the completed floor of an existing building. That new Aisle flooring is anchored to the building floor by screws which prevent the Aisle flooring from moving from place. In that case, it is difficult to determine in the abstract whether the Magic Aisle installation is intended to be a permanent installation to the building, and so the floor and tracking would classify as materials and the movable shelving attached to the tracking as fixtures, or whether the Magic Aisles were not permanent additions to the building and properly classified as machinery and equipment which would and should be removed as sooon as the building hosed a slightly different activity without damage to the building. That description of the installations in the brochures imply that they are usually installed in specialized buildings such as hospital buildings, bank buildings, and businesses, and government record storage buildings or areas. Further, they are storage record facilities, which may well be necessary and appropriate to the activities to which the building is adapted. So as a general rule, Magic Aisle installations which are installed on their own flooring added on top of the building flooring, would be flooring and tracking materials and would be shelving fixtures rather than installations of tangible personal property. As always, that presumptive classification might be rebutted by the circumstances of those installations which demonstrate classification as tangible personal property.

H--- Industries, Inc.
SR -- XX XXXXXX

-2-

May 12, 1976
190.1985

The Sierra steel shelving is of the type which appear readily movable and easily demountable without any damage to the building, and so are best presumptively classified as installations of tangible personal property. In your response to the district, you should answer the question regarding prospective application of the tax.

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