How were modular wall panels and attached cabinets classified for California sales tax?

Plain-English summary

Modular wall panels physically attached to a building were construction materials. The same panels used in a free-standing, non-affixed configuration were tangible personal property.

The classification of bookcases, cabinets, and similar components followed the panel system supporting them. Those items were fixtures when attached to wall panels affixed to realty, but they remained tangible personal property when attached to free-standing panels.

Common questions

Were all modular wall panels treated alike?

No. Physical attachment to the building controlled the memorandum's distinction.

How were affixed wall panels classified?

As materials.

How were free-standing panels classified?

As tangible personal property.

What about bookcases and cabinets attached to the panels?

They were fixtures on affixed panels and tangible personal property on free-standing panels.

Citations and references

• July 18, 1986 Audit Evaluation & Planning memorandum — concerned the current taxpayer's contracts to furnish and install modular office and health-science furniture systems; request answered but not reproduced in the official PDF
• January 5, 1981 E. Leslie Sorensen, Jr. memorandum to a redacted District Administrator — concerned similar W--- C--- F--- wall panels and supplied the affixed-panel conclusion reaffirmed in 1986; memorandum not reproduced in the official PDF
• District's 1981 request for opinion — mentioned bookcases and cabinets attached to the panels, but the 1986 source says the earlier memorandum did not answer that issue; request 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/190-2338.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Audit Evaluation & Planning

From:

E. Leslie Sorensen, Jr.

Subject:

S--- D--- Inc.

190.2338

Date:

September 3, 1986

SR -- XX-XXXXXX

This is in response to your memorandum of July 18, 1986 concerning the subject taxpayer’s contracts to furnish and install modular office and health science furniture systems. Reference was made to a memorandum dated January 5, 1981 which I wrote to the --District Administrator pertaining to similar items furnished and installed by W--- C--- F---. My memorandum addressed the classification of wall panels --only. My conclusion with regard to the panels was that if they were physically attached to the buildings they were classifiable as materials. Although mentioned in the District’s 1981 request for opinion, I did not address the question of how items such as bookcases and cabinets attached to the panels were to be classified. My opinion remains that wall panels furnished and installed to realty are classifiable as materials. Such panels in a free standing non-affixed configuration would, however, be classifiable as tangible personal property. With respect to bookcases, cabinets, etc. attached to the panels, it is my view that such items should be classified as fixtures if attached to wall panels which are affixed to the realty but should be classified as tangible personal property if attached to wall panels which are free standing.

ELS:rar