Were uninterruptible power systems installed at federal facilities fixtures consumed by the United States construction contractor?

Plain-English summary

An unidentified company manufactured and installed uninterruptible power systems that supplied continuous electricity to critical equipment or machinery at United States government facilities.

Staff reaffirmed that the UPS units were fixtures under Regulation 1521. They retained their identity as accessories to the buildings even if the federal government installed the embedded conduit and related wiring. They also were essential to the fixed works because their function was maintaining power to critical facility equipment.

As a United States construction contractor furnishing and installing fixtures, the client was treated as the consumer of the UPS units under Regulation 1521(b)(1)(A). Because the client was unidentified, neither the original response nor this reconsideration qualified for section 6596 reliance relief.

Common questions

Did government installation of conduit make the UPS non-fixtures?

No.

Were the UPS essential to the fixed works?

Yes, because they powered critical equipment.

Who consumed the fixtures?

The United States construction contractor.

Could the unidentified client rely under section 6596?

No.

Citations and references

• California Code of Regulations, title 18, section 1521(a)(5) — UPS units classified as fixtures
• California Code of Regulations, title 18, section 1521(b)(1)(A) — United States construction contractor treated as consumer
• California Revenue and Taxation Code section 6596 — reliance relief unavailable to the unidentified taxpayer
• Overhead Electric Co. v. State Board of Equalization (1991) 227 Cal.App.3d 1230 — similar UPS units treated as fixtures
• July 11, 1996 representative letter to Jerry Cornelius — requested reconsideration of the Agency's March 1996 response; contentions summarized and answered, but the letter is not reproduced in the official PDF
• Original unidentified-client request for a “Private Letter Ruling” concerning UPS sales and installations, plus prior correspondence — described but not fully dated or reproduced; the source reiterates that Board staff does not issue rulings
• March 1996 Agency response or Jerry Cornelius letter — concluded that the UPS were fixtures and the federal construction contractor was their consumer; the source first says March 27 and later says March 28, with no separate copy reproduced

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/190-2315.pdf

Original ruling text

190.2315

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
Telephone: (916) 324-2637
FAX: (916) 323-3387

DEAN ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento
────────

August 5, 1996

E. L. Sorensen, Jr.
Executive Director

Mr. J--- P. C----- --- & Co., --Suite XXXX
--- --- -----, NC XXXXX-XXXX
Re:

Unidentified Taxpayer;
Uninterruptible Power Systems

Dear Mr. C---:
Your July 11, 1996 letter to Mr. Jerry Cornelius was referred to the Legal Division for a response. You request reconsideration of this Agency’s March 27, 1996 response to your request for a “Private Letter Ruling” on how tax applies to your client’s sales of uninterruptible power systems (“UPS”). We reiterate from our previous correspondence that the Board staff does not issue rulings. Revenue and Taxation Code section 6596 sets forth the circumstances under which a taxpayer may be relieved of liability for taxes when reasonably relying on a written response to a written request for an opinion. This letter does not come within section 6596 because you have not identified your client in either of your letters to this Agency. You should provide us with the identity of your client (as well as all relevant facts involving the transaction) in any future correspondence with this Agency. We understand that your client manufactures and installs UPS which provide continuous electrical power to “critical equipment or machinery” at facilities operated and maintained by the United States government. This Agency previously opined that these UPS were fixtures within the meaning of Regulation 1521(a)(5) and that your client was the consumer of these UPS since it is a United States construction contractor. (See Reg. 1521(b)(1)(A).) You now contend that the UPS are not fixtures since the United States government is responsible for installation of all embedded conduit and related wiring, and that the UPS are “not essential” to the United States facility.

Mr. J--- P. C---

-2-

August 5, 1996
190.2315

Upon further review, we agree with the conclusions set forth in Mr. Cornelius’ March 28, 1996 letter finding that the UPS are fixtures within the meaning of Regulation 1521. The UPS do not lose their identity as accessories to the building whether or not the United State government is responsible for installation of the embedded conduit and wiring. The UPS are also essential to the fixed works since they provide continuous electrical power to critical machinery and equipment. We further note that a California Court of Appeal previously regarded UPS as fixtures under circumstances very similar to that of your client’s. (See Overhead Electric Co. v. State Bd. of Equalization (1991) 227 Cal.App.3d 1230.) We therefore continue to regard your client as the consumer of the UPS installed at the United States’ facilities. If you have any further questions, please write again. Sincerely,

Warren L. Astleford
Staff Counsel
WLA:rz
cc:

Out-of-State District Administrator - (OH)
Mr. Jerry W. Cornelius (MIC: 40)
Mr. Mike Hilbert (MIC: 40)