Did tax counsel treat counter display cards as exempt containers when they also helped ship the displayed products?

Plain-English summary

Tax counsel agreed that a container did not necessarily have to reach the product's ultimate consumer to qualify for the exemption.

But the counter display cards at issue were primarily advertising and display property. Because their use in shipping the products was merely incidental, staff concluded that they were not exempt containers under section 6364 and Ruling 49.

The letter invited the requester to seek a Board hearing if it disagreed; the published source does not state a later outcome.

Common questions

Did using the cards for shipping make them exempt containers?

No. Their primary advertising and display function controlled the staff analysis.

Citations and references

• Cal. Rev. & Tax. Code § 6364 — container exemption analyzed by tax counsel
• Sales and Use Tax Ruling 49 — historical container guidance applied in the source; separate ruling text not reproduced in the official PDF
• Requester's protest letter — sales tax on counter display cards and the requester's section 6364 analysis examined; 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/195-0340.pdf

Original ruling text

195.0340

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 4, 1953
[M]
Certified Public Accountants
XXX --- ----- --- XX, -Attention:

Account -- - XXXXXX

Mr. [U]
Re:

[T]

Gentlemen:
We have examined your letter of protest relating to the imposition of sales tax upon sales of counter display cards by the above-named taxpayer. We agree with your analysis of Section 6364 of the Revenue and Taxation Code to the extent that it is not essential that the “container” be delivered to the ultimate consumer of the product in order to be exempt from sales tax. Nevertheless, we think the counter display cards here involved are primarily for advertising and display purposes and their use in shipping the articles is merely incidental to that use. For this reason the counter display cards are not “containers” exempt from tax under Section 6364 and Ruling 49. If you do not agree with our conclusion and desire a hearing before the Board, please notify us and we will the matter set for hearing. Very truly yours,

E. H. Stetson
Tax Counsel
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