Could a brick seller buy pallets for resale when customers could choose to sell the pallets back?

Short answer Yes, if the pallets were sold with the bricks and were not customarily returned for reuse. A possible customer buyback did not by itself change that.

State

Ruling

Annotation 195.0720

Tax type

Sales and Use Tax

Issued

1956-06-27

Issued by

California State Board of Equalization

Requested by

Redacted brick seller

Topics

pallets brick resale exemption returnable containers nonreturnable containers sales tax

Source

View Original PDF

Apply this to your situation

This page answers the general question as of 1956. Ask about yours and see what current California tax law says, with citations.

Disclaimer: This June 27, 1956 opinion assumes the pallets were resold with bricks and were not customarily returned by customers for reuse. The June 7 request is described but not separately reproduced, its year is not stated, and the enclosed copy of Ruling 49 is not included in the official PDF. The source distinguishes an optional resale back to the brick seller from customary return. Current pallet, container, resale, and sales-tax rules control.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A brick seller bought pallets and transferred them to customers together with the bricks. Customers could choose to sell pallets back.

California agreed that the pallets were purchases for resale as nonreturnable containers, assuming customers did not customarily return them for reuse. If customary return existed, the pallets would instead be returnable containers under section 6364 and the historical ruling.

Common questions

Did the possibility of selling a pallet back make it returnable?

Not by itself. The opinion focused on whether customers customarily returned pallets for reuse.

Citations and references

Cal. Rev. & Tax. Code § 6364 — returnable-container rule applied in the letter
Sales and Use Tax Ruling 49 — historical container guidance cited; copy listed as enclosed but not included in the official PDF
Requester's June 7 letter — pallet-sale and optional-buyback facts and Los Angeles office concurrence described; separate letter not reproduced and its year not stated 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/195-0720.pdf

Original ruling text

195.0720

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

June 27, 1956

G---, M--- & Company
XXXX --- ----- --- XX, California
Attention:

Mr. E. M. D--Treasurer

-- - X - XXX

Gentlemen:
In your letter of June 7, you state that you buy pallets which are resold to your customers of brick along with the brick and that the pallets are non-returnable although if a customer wishes he may sell them back to you. You state that our Los Angeles office has concurred in your opinion that the purchase of the pallets by you is a purchase for resale. We agree with this opinion upon the assumption that the pallets are not customarily returned by your customers to you for reuse. If they are customarily returned, it would be properly regarded as a returnable container under Section 6364 of the Sales and Use Tax Law and Ruling 49, copy enclosed. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ds
Enclosure
cc:

Glendale – Compliance

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