Was undersealing taxable when applied to a customer's used car versus a dealer's car held for sale?
Apply this to your situation
This page answers the general question as of 1952. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
When underseal was applied to a customer's used car, California treated the applicator as the consumer of the material. Tax applied to the applicator's cost of the underseal, not to the charge made to the vehicle owner.
When a dealer undercoated a car held for sale, the full selling price of the car remained taxable without deduction for the labor or materials. The dealer could take a tax-paid-purchases-resold deduction for qualifying tax-paid material applied to the car.
Common questions
Was used-car undersealing taxable to the customer?
No.
Who paid tax on the material?
The applicator, on its purchase cost.
What about a dealer's car held for sale?
Undercoating remained part of the taxable car price.
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/315-0900.pdf
Original ruling text
315.0900
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
January 8, 1952
Mr. J--- D--- P--XXX --- Street
--- ---, California
Attention:
E. E---, Bookkeeper
Dear Mr. P---:
This is in answer to your letter dated December 26, 1951, regarding the tax applicable to the sale of “underseal”. If the work is done on used cars belonging to the customer, the person doing the work is regarded as the consumer of the materials, undersealing in this case, used thereon. Therefore, tax would apply to the cost price of the materials used by the person performing the work. Accordingly, tax is applicable to the sale of “underseal” to you and is not applicable to the charge made your customer for undersealing his automobile. Where a dealer undercoats a car which is to be sold we regard the tax as applicable to the full sales price of the car, without deduction on account of the cost of labor and materials used. In this instance, however, the dealer would be entitled to take a deduction for tax-paid purchases resold in the amount of the cost price of the materials purchased tax paid and applied to the car. Very truly yours,
E. H. Stetson
Tax Counsel
TMH:ja
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