Was reheating a field-welded pipe to relieve concentrated stress taxable fabrication?

Plain-English summary

A contractor made a field weld on pipe being used to construct a steam plant. Because the weld's heat concentrated strength in the heated area, the pipe was sent out for reheating to relieve that stress.

California treated the stress-relief charge as work more like repair than fabrication and therefore not subject to sales tax.

Common questions

Was the reheating taxable fabrication?

No.

What created the need for the work?

Stress concentrated by a field weld.

Did the opinion address all industrial heat treatment?

No. It addressed this specific post-weld stress-relief work.

Citations and references

The supporting opinion does not cite a specific statute or regulation.

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/315-0840.pdf

Original ruling text

315.0840

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

October 6, 1954
Your letter of August 2
Account No. B-X-XXXXX
B--- Corporation
P. O. Box XXXX
---, California
Attention:

Mr. J. F. M---

Gentlemen:
You purchased pipe from one of your suppliers for use in the construction of a steam plant at Pittsburg, California. In the field you mad a slight revision in plans and made a weld on the pipe. The hear from the weld tends to concentrate the strength of the pipe to the heated area. You then sent the pipe to S. H. E--- whose job it was to stress relieve the pipe by reheating. It is our opinion that the charges made to you by S. H. E--- are for work which is more like repair than fabrication. Accordingly, these are not subject to sales tax. Yours very truly,

Bill Holden
Assistant Counsel

BH:ja

cc:

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