Were engine-overhaul parts taxable when the overhauled engine went first to the owner's California mount repairman and only later left the state as a completed assembly?

Plain-English summary

A redacted aircraft-engine overhauler had written on June 8, 1965 to Board official Ford S. Dixon. The published reply says the request was referred to associate tax counsel, but the request and underlying records are absent.

According to counsel's understanding, an out-of-state owner made separate agreements with the addressee to overhaul an aircraft engine and with another repairman to repair its mount. The owner would send the combined engine-and-mount "power package" by common carrier to the mount repairman. That repairman would remove the engine; the overhauler would obtain, overhaul and return it; and the mount repairman would reinstall it and send the completed assembly to the owner by common carrier.

Historical Sales Tax Ruling 55a(2)(c), as quoted in the letter, applied sales tax when property was sold and delivered to a purchaser or representative in California, regardless of the purchaser's intent to take it outside or whether it actually went outside.

Counsel treated the mount repairman as the owner's representative when it received the overhauled engine in California. The overhaul parts therefore were regarded as sold and delivered to the purchaser's representative here, making the overhauler's parts sales taxable retail sales.

The source does not reproduce either repair contract, shipment or delivery records, the parts and invoices, or any completed tax proceeding. The live annotation repeats the transaction sequence and taxable result but says tax applies "as indicated in the regulation" rather than naming the PDF's cited historical ruling.

Common questions

Did the later common-carrier shipment outside California exempt the parts?

No. Under the cited historical rule, California delivery to the purchaser or its representative controlled even when outside transport was intended and actually occurred.

Why did the mount repairman count as the owner’s representative?

Counsel states that conclusion but supplies no contract or other agency evidence. It was the premise that made the in-state handoff taxable.

Did the owner contract separately with the two repair businesses?

Yes, according to counsel's understanding: one agreement covered the engine overhaul and another covered mount repair. The contracts themselves are absent.

Was the whole overhaul charge held taxable?

The letter specifically says the overhauler's sales of repair parts used in the overhaul were taxable retail sales. It does not state the treatment of labor or provide an invoice.

Does the source document a tax amount or completed assessment?

No. It supplies no prices, tax amount, filing, audit, assessment, payment, claim, appeal or later result.

Is the cited historical ruling reproduced?

No. The PDF quotes its delivery rule but does not supply the ruling's full text, conditions, later amendments or replacement history.

Citations and references

• Sales Tax Ruling 55a(2)(c) — historical California-delivery rule quoted in part; full authority and later history absent
• June 8, 1965 request to Ford S. Dixon — identified in the response but not reproduced
• July 1, 1965 associate-tax-counsel response — finds the overhaul-parts sales taxable on the stated representative-delivery premise
• Official Annotation 325.0720 — preserves the sequence and result but describes the authority generically as a regulation

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 325.0720
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0720.pdf

Original ruling text

325.0720

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

July 1, 1965

Gentlemen:
Your letter of June 8, 1965, addressed to Mr. Ford S. Dixon, State Board of Equalization in Pasadena, has been referred to this office for reply. It is our understanding that an out-of-state owner of an aircraft engine and mount assembly (power package) has entered into agreements with your company to overhaul the engine and with a mounting repairman to repair the mount. The customer sends, by common carrier, the entire power package to the mount repairman who removes the engine. Pursuant to your contract with the customer, you obtain the engine from the mount repairman, overhaul it, and return it to the mount repairman. The repairman who has overhauled the mount reinstalls the overhauled engine and returns the power package via common carrier to the out-of-state customer. As indicated in Sales Tax Ruling 55a(2) (c), sales tax applies to the sale of property which is sold and delivered to the purchaser or his representative in this state whether or not the intention of the purchaser is to transport the property outside the state and whether or not the property is actually so transported. Inasmuch as the mount repairman takes delivery of the overhauled engine as representative of the owner, the parts used to overhaul the engine are regarded as having been sold and delivered to a representative of the purchaser in this state. Accordingly, your sales of repair parts used in the overhaul of such engines are taxable retail sales.

Very truly yours,

George A. Trigueros
Associate Tax Counsel

GAT:ls [lb]