Was a florist's labor arranging fresh flowers in customers' vases nontaxable installation labor?

Plain-English summary

A florist delivered fresh flowers to two racetracks, removed old flowers, and arranged the new flowers in the customers' existing vases for lump-sum prices. California concluded that arranging the flowers was taxable fabrication, not nontaxable installation labor.

The memorandum described installation as physically connecting property to other property, often by anchoring, attaching, mounting, or fastening it. Flowers would fall out if the vase were inverted, so the arrangement was not installed. If the florist merely placed flowers in a vase without arranging them, the Board would treat that labor as transportation because the florist was following the customer's placement direction.

The flower charges were taxable. On the memorandum's assumptions that the florist used its own trucks and the contracts did not pass title before delivery, delivery charges were also taxable.

Common questions

Was arranging flowers in a customer's vase installation?

No. The memorandum treated it as taxable fabrication.

What if the florist merely put unarranged flowers where the customer directed?

The Board said it would treat that labor as transportation, not installation.

Could the successor owner rely on advice allegedly issued to the former partnership?

Not on the information presented. The opinion could not be found, and the memorandum said only the person who requested written advice could rely on it under section 6596.

Citations and references

• California Revenue and Taxation Code sections 6012(a)(2), 6012(c)(3), 6596, and 6596(d)
• Tobi Transport, Inc. v. State Board of Equalization (1980) 104 Cal.App.3d 730 — the official PDF prints "Tobi Transport, Inv."
• Arcadia Audit Unit's April 12, 1991 memorandum — taxpayer history, audit facts, asserted prior advice, contracts, and question described; full memorandum not reproduced in the official PDF
• Alleged 1959 or 1960 partnership request and Board written advice allowing exempt installation labor — taxpayer's assertion described; Board could not locate the opinion, and neither the request nor advice was supplied
• Completed successor audit and nonconcurred results — procedural status stated; audit report, schedules, workpapers, notice, nonconcurrence, and supporting records not reproduced in the official PDF
• Partnership closure after a partner's 1974 death, successor sole proprietorship, two racetrack lump-sum contracts, flower purchases and sales, delivery in own trucks, old-flower removal, fresh-flower placement and arrangement, customer vases, and assumed lack of pre-delivery title passage — facts and assumptions described; underlying entity, death, succession, contract, invoice, flower, truck, delivery, customer, title, and return records not reproduced in the official PDF
• Source-printed "Tobi Transport, Inv." caption and missing closing parenthesis after section 6596(d) — printed text preserved; not silently corrected
• Possible later production of the alleged request or advice, audit resolution, assessment, reliance relief, refund claim, appeal, or other outcome — no follow-up or final outcome supplied 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/240-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/240-0010.pdf

Original ruling text

State of California

Memorandum

To:

R. K. Bennet
Arcadia Audit Unit

From:

Elizabeth Abreu
Tax Counsel

Subject:

R. R. B--- and M. M--dba B--- - B--SR -- XX-XXXXXX and SR -- XX-XXXXXX

Board of Equalization

240.0010

May 29, 1991

By memorandum dated April 12, 1991, you inquired if we could identify a ruling which the above-referenced taxpayer asserts he obtained in 1959 or 1960. According to your memorandum, the facts are as follows: B--- - B--- was a partnership which was closed out in 1974 when one of the partners died. The board has completed an audit of the successor, a sole proprietorship owned by R--- B---. The results are nonconcurred. Mr. B--- contends that in 1959 or 1960 the partnership obtained a ruling from the board concerning the application of sales tax to the partnership’s florist business. Mr. B--- asserts that the board ruled that not all of his gross receipts were subject to sales tax because he was allowed a deduction for exempt installation labor. Mr. B---’s business sells fresh flowers to two race tracks under lump-sum contracts. Mr. B--- delivers the flowers to the betting rooms, removes the old flowers from the vases and leaves them on a table or counter, and arranges the fresh flowers in the same vases. The predecessor partnership was engaged in similar transactions. We have been unable to locate the opinion which Mr. B--- alleges the board issued. Before Mr. B--- may be excused from payment of taxes because of his reliance on this opinion, he must submit a copy of his written request to the board and a copy of the board’s written advice to him. He must also meet all the other requirements set forth in Revenue and Taxation Code section 6596. If the partnership sought the advice rather than Mr. B---’s sole proprietorship, it is the position of the board’s staff that Mr. B--- cannot rely upon the advice

R. K. Bennet

-2-

May 29, 1991
240.0010

because he does not meet the requirement that only the person making the written request shall be entitled to rely on the board’s written advice to that person. (Rev. & Tax. Code § 6596(d). From your description of Mr. B---’s contracts, we conclude that Mr. B---’s charges do not include charges for installation labor which are nontaxable under Revenue and Taxation Code section 6012(c)(3). Under his contracts Mr. B--- appears to be charging his customers for the flowers, for delivery of the flowers and for arrangement of the flowers in the vases. It is clear that his charges for the flowers are taxable. We assume that he delivers the flowers in his own trucks and that his contracts do not provide that title passes before delivery. Therefore his delivery charges are includible in gross receipts and are taxable. Rev. & Tax. Code § 6012(a)(2). Neither the Revenue and Taxation Code nor the regulations define installation labor, but generally it connotes the anchoring, attaching, connecting, mounting, or fastening of property to other property, often by using items such as glue, bolts, screws, nails, or wires to make the connection. Such labor also includes tuning, testing, and adjustment of the property during installation. Mr. B--- is not physically connecting the flowers to the vases. Turn the vases upside down and the flowers will spill to the ground. If he is just sticking the flowers in the vases without regard to their arrangement, we will treat his charges for such labor as transportation charges because again he is not connecting the flowers to the vases. Rather, he is just following the customer’s direction with respect to placement, i.e., transportation. Tobi Transport, Inv. v. State Board of Equalization (1980) 104 Cal. App. 3d 730. If you need further assistance, please let us know.

EA:cl

cc:

240.0010.doc

Hollywood District Administrator