Were charges to polish or rechrome used auto-body parts taxable when material costs were insignificant?

Plain-English summary

An auto-body shop subcontracted polishing and rechroming of used chrome or stainless-steel parts. California treated both activities as repair because the incorporated materials were insignificant compared with the total charge.

The polishing or rechroming firm was the consumer of its materials, and tax did not apply to its charge. Tax also did not apply when the body shop passed that repair charge to its customer with a markup.

Common questions

Was the subcontractor's charge taxable?

No.

Was the body shop's markup taxable?

No, under the stated repair treatment.

What material assumption supported the result?

Materials were insignificant in relation to the total charge.

Citations and references

• Historical Rulings 26 and 30

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/315-0740.pdf

Original ruling text

315.0740

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 5, 1954

Dear Mr.
You do auto body repair work and on many jobs it is necessary to have chrome or stainless steel parts polished or rechromed. This work is subcontracted to an outside firm. You inquire concerning the application of sales tax to the charge made to you by this firm. The application of tax to repair work is governed by Ruling 26 (copy enclosed). See also Ruling 30 (copy enclosed). Certainly, in the case of polishing, any materials which become an ingredient or component part of the item polished are insignificant in cost in comparison with the total charge. In the case of rechroming, we have also considered the cost of materials to be insignificant in relation to the total charge. Accordingly, both polishing and rechroming of used property are repair activities which are governed by the second paragraph of Ruling 26. Thus, the person performing the polishing or rechroming is the consumer of all materials used and tax does not apply to his charges. Likewise, tax does not apply to the charge which you make to the customer for this work even though you might add a markup to the amount charged you by the subcontractor. We enclose an extra copy of this letter for your convenience in corresponding with the firm which does your polishing and rechroming work.

Yours very truly,

Bill Holden
Assistant Counsel

BH:ja
cc: San Bernardino - Auditing