Which parts of a locksmith's separately stated vehicle-key service charge were taxable?

Plain-English summary

A locksmith separately charged a motorist for a replacement ignition key, travel to the vehicle, and disassembly and reassembly of the steering column.

California treated the key as a taxable retail sale of tangible personal property. The travel charge was a nontaxable service. The steering-column charge was also nontaxable because the work appeared to repair or recondition the existing property for its original use rather than create or produce property with a changed form or kind.

Common questions

Was the replacement key taxable?

Yes.

Was the charge for traveling to the vehicle taxable?

No.

Was steering-column disassembly always nontaxable?

No. The source's answer depended on its repair purpose rather than fabrication.

Citations and references

• California Code of Regulations, title 18, Regulations 1526 and 1546(b)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/315-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/315-0555.pdf

Original ruling text

315.0555

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-8485

October 27, 1982

Mr. R--- V----- Locksmiths
XXXX --- Avenue
---, CA XXXXX

Dear Mr. V---:
SR – XX-XXXXXX
This is in response to your letter of September 14, 1982. We understand that in your business as a locksmith you are called on by motorists to furnish them with new keys for their vehicles’ ignitions. You wondered how tax applies to these transactions. A typical invoice might include the following separately identified charges: 1.

original key:

$12.50

2.

service charge:

$17.50

3.

disassembly and
reassembly of
steering column:

$25.00

The $12.50 charge for the key is clearly subject to tax as a retail sale of tangible personal property (See Reg. 1546, subd. (b), copy enclosed). The $17.50 charge, which you indicated in our telephone conversation was the charge for going to the customer’s location to do the work, we view as a nontaxable charge for services. Finally, the $25.00 charge for disassembly and reassembly of the customer’s steering column may be taxable or nontaxable depending on the purpose for performing this function. If the purpose is the creation or production of tangible personal property as evidenced by a change in form or kind, the labor is taxable fabrication labor. If, on the other hand, the purpose is merely the repair or reconditioning of the property to refit it for the use for which it was originally produced, the labor is nontaxable (See Reg. 1526, copy

Mr. R--- V--SR – XX-XXXXXX

-2-

October 27, 1982
315.0555

enclosed). Here, it would appear that the labor which you perform does not change the form or kind of the customer’s property, rather, it seems to be in the nature of repair labor. As such, the $25.00 charge would not be subject to tax. We hope this has answered your questions. If it has not, or if we can be of further assistance, please contact us again. Very truly yours,

Les Sorensen
Tax Counsel

LS:at
Enclosures

bc:

--- – District Administrator