Did school buildings qualify for the factory-built-school-building tax measure when they were approvable but not actually approved at their location?

Plain-English summary

The leased buildings did not qualify for the factory-built-school-building tax measure merely because they were designed to be approvable. Section 6012.6 required actual approval by the Office of the State Architect's structural-safety section.

The opinion also identified a separate site condition: the building had to be assembled, erected, or installed on a site owned by a school district or community college district. The request did not establish whether that condition was met.

Under the historical rule described in the letter, a qualifying factory-built school building was taxed on 40% of its sales price to the consumer. Because actual approval was missing, no such treatment applied here.

Common questions

Was being capable of approval enough?

No.

What approval was required?

Actual structural-safety approval from the Office of the State Architect.

Was site ownership also relevant?

Yes.

Citations and references

• California Revenue and Taxation Code section 6012.6 — factory-built-school-building definition and historical 40% taxable measure applied
• August 1, 1991 lessor letter — described three O.S.A.-approvable but unapproved San Diego County school buildings and asked about sales-and-use-tax treatment; request summarized and answered but 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/190-2410.pdf

Original ruling text

190.2410

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-5550

August 23, 1991
Ms. J--- S--M--- B--- C--XXXX --- --- --- Road
--- ---, California XXXXX
Re:
SR -- XX-XXXXXX
Dear Ms. S---:
This is in response to your letter dated August 1, 1991. You lease to a lessee in San Diego County three school buildings which you characterize as O.S.A. (Office of the State Architect) approvable. You note, however, that these buildings have not been approved at their current location by O.S.A. You ask whether they are entitled to exemptions from sales and use tax under Revenue and Taxation Code section 6012.6. Under section 6012.6, the taxable measure of gross receipts from the sale of factory-built school buildings is forty percent of the sales price of that factory-built school building to the consumer. “Factory-built school building” is defined as a building designed in compliance with the state laws for school construction and approved by the structural safety section in the Office of the State Architect and which building is either wholly manufactured or is in substantial part manufactured at an off-site location to be assembled, erected, or installed on a site owned by a school district or a community college district. You do not state whether the buildings in question will be erected and installed on a site owned or leased by a school district or a community college district. If not, no exemption would be applicable. Furthermore, a condition to receiving the exemption is that the building actually be approved by the structural safety section in the Office of the State Architect. Although you believe the buildings you lease are approvable, you state that they have not been approved by the Office of the State Architect. Therefore, we conclude that no exemption is applicable. If you have further questions, please feel free to write again. Sincerely,

David H. Levine
Senior Tax Counsel
DHL:cl