Could a leather tanner buy Tanasol PW and Nopco 1525 for resale as components of finished leather?

Plain-English summary

California recommended resale treatment for Tanasol PW used in tanning leather, while treating Nopco 1525 as a taxable manufacturing aid. The memorandum agreed with the audit section that Tanasol PW became part of the tanned leather.

Nopco 1525 was used as an oil emulsifier and degreasing agent, which the source characterized as a processing aid rather than a resale component. The memorandum did not decide the different hypothetical use of Nopco as a level leather-dyeing agent because no such audit issue had been presented.

Common questions

Which chemical qualified for resale treatment?

Tanasol PW.

Why was Nopco 1525 taxable?

Its stated degreasing use made it a manufacturing or processing aid.

Did the memorandum decide treatment when Nopco was used as a dye-leveling agent?

No.

Is the referenced chemical-company reply included?

No. The memorandum describes it as an enclosure, but the published PDF ends without reproducing it.

Citations and references

• Audit Section's July 27, 1972 memorandum and attached materials concerning Tanasol PW and Nopco 1525 — memorandum and attachments referenced but not reproduced in the official PDF
• Donald J. Hennessy's unidentified tanning research supporting the two classifications — research referenced without sources, dates, notes, analysis, or copies in the official PDF
• August 9 letter to the Tanning Chemicals Department of a redacted chemical company stating tentative classifications and requesting its opinion — letter referenced but not reproduced in the official PDF
• Marketing manager W. G. O---'s August 16, 1972 reply agreeing with the tentative classifications and describing a degreasing agent as a processing aid — reply quoted in part and listed as an enclosure but not reproduced as a separate record in the official PDF
• Statement by an unidentified representative of a redacted tanning company that Nopco 1525 was used as an oil emulsifier — statement referenced without date, form, authority, context, or separate record in the official PDF
• Tanasol PW and Nopco 1525 identities, compositions, tanning uses, incorporation, purchases, and sales — selected uses and outcomes supplied; complete specifications, formulations, process records, purchase orders, invoices, tests, mass balances, retention evidence, and finished-leather records not reproduced in the official PDF
• Possible Nopco 1525 use as a level leather-dyeing agent — possibility mentioned but expressly left undecided pending an audit problem; no product, use, transaction, or audit evidence supplied
• Official Annotation 260.0090's statement that Tanasol PW was a synthetic tannin incorporated in leather and Nopco 1525 an oil-emulsifier degreasing aid — annotation adds the synthetic-tannin and incorporation facts but prints a sentence lacking “is” before “incorporated” and supplies no additional record
• Possible later audit problem, purchase, formulation or process change, assessment, refund claim, appeal, or other agency action — 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/260-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/260-0090.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. R. Nunes – Audit Section

From:

Donald J. Hennessy

Subject:

Chemicals Used in Tanning

260.0090

August 24, 1972

SY --- XX XXXXXX

This is in response to your memorandum and attached materials of July 27, 1972 concerning the use of “Tanasol PW” and “Nopco 1525,” chemicals used in the tanning of leather. My research on tanning led to the same conclusion you expressed in your memorandum, i.e., “Tanasol PW” may be purchased for resale, but “Nopco 1525” was a taxable manufacturing aid. I expressed our tentative conclusion in my August 9 letter to the Tanning Chemicals Department of D--- S--- C--- Company and asked for their opinion. Enclosed is a copy of the August 16, 1972 reply from Mr. W. G. O---, Marketing Manager, which agrees with our conclusions. We therefore recommend that “Tanasol PW” be accepted as sold for resale and that sales of “Nopco 1525” be taxed as retail sales. The representative of L--- A--- T--- Co. has stated that “Nopco 1525” is used as an oil emulsifier, which use is within Mr. O---’s statement “.. a degreasing agent should be accepted as a ‘processing aid.’” Neither the representative of L--- A--- T--- Company or Mr. O--- mentions the possible use of “Nopco 1525” as a level leather dyeing agent, and such possibility would be best ignored until such a use presents an audit problem.

DJH:dih
Enclosure
cc:

Out-of-State District Headquarters