Ezel / Tax Rulings / CA

Were cheap pallets built for clay-product shipments exempt when discarded at the final destination?

Short answer Yes. California classified them as exempt nonreturnable containers. More substantial returnable or reusable pallets were taxable without resale proof.
State
CA
Ruling
Annotation 195.0740
Tax type
Sales and Use Tax
Issued
1960-12-12
Issued by
California State Board of Equalization
Requested by
Redacted disposable-pallet seller
Topics
pallets shipment reuse resale certificate sales tax
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1960. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1960
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This December 12, 1960 opinion concerns cheaply constructed pallets made for one customer, used to ship clay products, and discarded at destination. The December 9 telephone conversation is summarized but not separately reproduced, its year is not stated, and the enclosed copy of Ruling 49 is not included in the official PDF. It distinguishes more substantial returnable or reusable pallets and notes that resale documentation could matter. Current container, reuse, certificate, 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

Pallets constructed specifically for a customer, used to strap clay products for shipment, cheaply built, and discarded at the final destination qualified as exempt nonreturnable containers.

The opinion distinguished more substantial pallets that were returnable or reusable by the seller's customer or the product recipient. Those sales were taxable unless the pallet purchaser supplied a resale certificate.

Common questions

Did every pallet qualify?

No. Construction, returnability, reuse, and resale documentation mattered.

Citations and references

  • Sales and Use Tax Ruling 49 — historical container guidance applied by tax counsel; copy listed as enclosed but not included in the official PDF
  • December 9 telephone conversation with the requester — pallet construction, shipment, and disposal facts summarized; separate record not reproduced and its year not stated in the official PDF

Source

Original ruling text

195.0740

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

December 12, 1960

C--- P--- B--- D--Post Office Box XXX
--- X, California
Attention:

-- - Y -XXX
Now: S- -- XX-XXXXXX

A. D. A--Production Manager

Gentlemen:
This is in reply to your inquiry regarding the applicability of sales tax to the sale of disposable pallets. In our telephone conversation of December 9, you informed us that these pallets are constructed specifically for a customer who straps his clay products thereon for shipment. The pallets are of a cheap construction and are discarded after reaching the final destination. Under these circumstances, we are of the opinion that these pallets may be classified as containers, and therefore are exempt from sales tax per Sales and Use Tax Ruling 49, copy enclosed. If you should sell pallets of a more substantial construction which are returnable or may be reused by either your customer or the recipient of your customer’s product, the tax would apply unless the purchaser of the pallet gives a resale certificate. Very truly yours,

E. H. Stetson
Tax Counsel
RG:gg
Enclosure
cc:

--- - Administrator
--- --- - Administrator

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