Were cardboard and printing taxable when printed cards were stapled to bagged food and sold with the product?

Plain-English summary

A food seller bought cardboard, had a printer label it, stapled it to food items in cellophane bags, and sold the cardboard with the goods without return.

California treated the cardboard as an exempt nonreturnable container. The printer's charge was also exempt as part of that container, and the seller could issue resale certificates for both cardboard and printing.

Common questions

Did printing make the cardboard taxable?

No. The source assumed the printing simply labeled the commodities and did not advertise the company.

Citations and references

• California Revenue and Taxation Code section 6364(a) — nonreturnable-container exemption applied
• Sales and Use Tax Ruling 49 — historical container-exemption explanation cited and listed as an enclosure; enclosure not included in the official PDF
• Sales and Use Tax Ruling 68 — approved resale-certificate form cited and listed as an enclosure; enclosure not included in the official PDF
• Requester's March 12 letter — cardboard, printing, labeling, cellophane-bag, food-product, and nonreturn facts described; separate letter 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/195-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/195-0180.pdf

Original ruling text

195.0180

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-6493

March 21, 1956
[L]
XXX --- ----- --- XX, -Attention:

-- - XXXXX
Mr. [N]

Gentlemen:
In your letter of March 12 you state that you purchase cardboard, furnishing it to a printer for printing, and then using it as a non-returnable container to which is stapled various food items in cellophane bags. You state that the printing does not advertise your company and we assume it is simply the label of the commodities. The printed cardboard is sold with the goods and is not returned to you. It appears from these facts which you set forth in your letter that the cardboard is a nonreturnable container so that the sale thereof to you is exempted from tax under Section 6364(a) of the Sales and Use Tax Law, further explained in Ruling 49, copy enclosed. Thus, the tax does not apply either to the sale of the cardboard to you or to the printer’s charges as the printing is likewise exempt as a part of the non-returnable container. As the commodities sold in the containers are exempt food products, no portion of the gross receipts from such sales are taxable. You may use a resale certificate in purchasing your cardboard and printing. Although you probably have prepared resale certificates for your other vendors, we are, nevertheless, enclosing herewith a copy of Ruling 68 setting forth the approved form of resale certificates. Very truly yours,

E. H. Stetson
Tax Counsel
EHS:ds