When could water-treatment chemicals be bought tax-free for resale as part of the water?

Plain-English summary

A water-treatment chemical could be purchased for resale only when it actually remained in the water sold in sufficient quantity to be treated as a component. The result depended on the real process and use, not merely the chemical's name; losing a relatively small portion before sale did not by itself defeat resale treatment.

The letter listed calcium hypochlorite, chlorine, hydrated lime, lime, quicklime, soda ash, sodium hydroxide, sodium hypochlorite, “solium silicofluoride” as printed, and copper sulphate as chemicals understood to remain in sold water. If a particular process removed one of them, its purchase was not exempt as a resale purchase.

The source's earlier statement that alum settled out with sediment and was not resold as a water component is expressly marked superseded by a March 25, 1965 opinion identified as Annotation 440.2300.

Citations and references

• No specific statute or regulation was cited in the published letter.
• April 8, 1964 telephone conversation concerning chemicals added to water sold by municipalities and other water sellers — participants beyond sender and recipient, questions, notes, and separate record not provided in the official PDF
• Unidentified older Board holding that alum settled with sediment and was not resold as a water component — holding summarized without date, opinion, ruling, annotation, analysis, or supporting record in the official PDF
• Unidentified prior Board conclusions that ten source-listed chemicals remained in sold water in sufficient quantities for resale treatment — conclusions stated without dates, opinions, tests, retention data, processes, or supporting records in the official PDF
• March 25, 1965 GAT opinion published as Annotation 440.2300 and expressly superseding the letter's alum statement — opinion identified in a source-added footnote but not reproduced in the official PDF
• Water-treatment chemical identity, quantity, process, retention, removal, water sale, purchase, and resale evidence — process-specific rule stated; complete formulations, treatment diagrams, dosing records, chemical analyses, retention tests, purchases, invoices, water sales, and customer records not reproduced in the official PDF
• Official Annotation 275.0280's merged chemical list and dates — annotation changes source-printed “solium” to sodium, sulphate to sulfate, and quicklime spacing, and assigns sodium silicofluoride November 21, 1962 without supplying that earlier source or explaining the normalization
• Possible later chemical or process review, purchase, sale, audit, assessment, refund claim, appeal, or other agency action beyond the identified alum supersession — no further 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/275-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/275-0280.pdf

Original ruling text

275.0280

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 9, 1964

--- --- ----- --- ----- --- --Dear Mr. ---:
This is to confirm our telephone conversation of yesterday concerning the application of sales tax with respect to chemicals which are added to water which is then sold by a municipality or other seller of water. You specifically mentioned alum. Some years ago, we held that alum used in treating water is not sold for resale because our understanding was that it is used to remove sediment in the water and settles to the bottom of the reservoir with the sediment. It is not resold as a component part of the water.* On the other hand, we have concluded that the following chemicals remain in the water when sold in sufficient quantities to state that the chemicals are sold for resale along with the water: calcium hypochlorite chlorine hydrated lime lime quicklime

soda ash
sodium hydroxide
sodium hypochlorite
solium silicofluoride
copper sulphate

Should any of these chemicals by virtue of any particular process or use, in fact, not remain in the water, their sale would not be exempt as a sale for resale. The exemption does not depend upon the particular chemical, but upon the actual fact of whether the chemical remains in the water when the water is sold. The loss of a relatively small portion of the chemical before being sold with the water would not, however, result in the application of the tax. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:fb

[1b]

*Superseded by GAT 3/25/65. Annot. 440.2300.