Were fabricated steel reinforcing bars installed in concrete materials, and what was the manufacturer-installer's tax measure?

Plain-English summary

Steel reinforcing bars installed to reinforce concrete were materials under former Board Ruling 11. A contractor that manufactured them from purchased scrap metal was therefore taxed on the cost of its raw materials.

If the business instead made retail sales of reinforcing bars, the measure was the retail selling price. Furnishing and installing fixtures would also follow the separate historical fixture rules.

Common questions

Were reinforcing bars installed in concrete fixtures?

No. The letter classified them as materials.

What measure applied to the manufacturer-installer?

Its raw-material cost.

What measure applied to separately sold bars?

Their retail selling price.

Citations and references

• Former California Sales and Use Tax Ruling 11 — materials, fixtures, construction-contractor consumer status, and manufacturer-contractor measures applied
• June 14 accounting-firm letter — asked how to compute sales or use tax for a client converting scrap metal into ingots and reinforcing bars installed in concrete; year and separate request not supplied in the official PDF
• Enclosed copy of former Sales and Use Tax Ruling 11 — identified as an enclosure; 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/190-2220.pdf

Original ruling text

190.2220

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 18, 1966

S--- M. W--- & Co.
Certified Public Accountants
--- ---, California
Gentlemen:
This is in answer to your letter of June 14 with respect to the correct method of computing sales or use taxes in connection with your client’s business of purchasing scrap metals which it processes into steel “Ingots,” which in turn are converted to steel reinforcing bars and installed in concrete structures under construction contracts. The application of tax to construction contractors generally is governed by Sales and Use Tax Ruling 11, copy enclosed. As therein indicated, a distinction is made between “materials,” as defined in said Ruling, and “fixtures,” as defined therein. As there stated, construction contractors are regarded as consumers of “materials” used in fulfilling a construction contract. Reinforcing bars used for the purpose of reinforcing concrete constitute “materials” within the meaning of Ruling 11. Accordingly, the measure of the tax is the cost price of the raw materials from which your client fabricates the reinforcing bars. If you client will make any sales of the reinforcing bars, the measure of the tax will be, of course, the retail selling price. In addition, as indicated by said Ruling 11, if it furnishes and installs “fixtures” and the tax will apply in the manner therein prescribed. Very truly yours,

R. G. Hamlin
Tax Counsel

RGH/RW